UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

(Mark One)
[X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934

        For the fiscal year ended      December 31, 2003
                                   --------------------------

                                       OR

[  ]    TRANSITION  REPORT  PURSUANT TO  SECTION 13 OR  15(d) OF THE  SECURITIES
        EXCHANGE ACT OF 1934

        For the transition period from ___________________ to __________________


                        Commission file number 001-04668
                                               ---------

                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                     ---------------------------------------
             (Exact name of registrant as specified in its charter)

         BERMUDA                                                    NONE
-----------------------------------                        ---------------------
State or other jurisdiction of                                (I.R.S. Employer
  incorporation or organization                              Identification No.)

      Clarendon House
       Church Street
      Hamilton, Bermuda                                            HM 11
-----------------------------------                        ---------------------
(Address of principal executive offices)                         (Zip Code)

Registrant's telephone number, including area code          (850) 653-9165
                                                          -------------------

Securities registered pursuant to Section 12(b) of the Act:

                                                        Name of each exchange on
        Title of each class                                  which registered
------------------------------------------              ------------------------
              NONE

          Securities registered pursuant to Section 12(g) of the Act:

                     Common stock, par value $.12 per share
      -------------------------------------------------------------------
                                (Title of Class)



<PAGE>


     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. |X| Yes |_| No

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K ss.229.405 of this chapter) is not contained  herein,  and
will not be  contained,  to the best of  registrant's  knowledge,  in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. |X|

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Act). |_| Yes |X| No

     The aggregate  market value of the common stock held by  non-affiliates  of
the registrant was approximately $3,074,073 (U.S.) at April 1, 2004.

     Indicate  the  number of  shares  outstanding  of each of the  registrant's
classes of common stock, as of the latest practicable date:

     Common stock, par value $.12 per share, 46,211,604 shares outstanding as of
March 18, 2004.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None







                                       2
<PAGE>




                                TABLE OF CONTENTS
                                -----------------

                                                                            Page
                                                                            ----
                                     PART I

          Risk Factors                                                         4

Item 1.   Business                                                            10

Item 2.   Properties                                                          15

Item 3.   Legal Proceedings                                                   18

Item 4.   Submission of Matters to a Vote of Security Holders                 24

                                     PART II

Item 5.   Market for the Company's Common Stock and Related
          Stockholder Matters                                                 25

Item 6.   Selected Consolidated Financial Information                         28

Item 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                           29

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk          32

Item 8.   Financial Statements and Supplementary Data                         34

Item 9.   Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure                                 58

Item 9A.  Controls and Procedures                                             58

                                    PART III

Item 10.  Directors and Executive Officers of the Company                     59

Item 11.  Executive Compensation                                              61

Item 12.  Security Ownership of Certain Beneficial Owners and Management      63

Item 13.  Certain Relationships and Related Transactions                      65

Item 14.  Principal Accounting Fees and Service                               66


                                     PART IV

Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K     67



---------------------------
All monetary figures set forth are expressed in United States currency.



                                       3
<PAGE>



                                     PART I
                                     ------

                                  RISK FACTORS

     An investment in the Company's common stock involves a high degree of risk.
You should carefully  consider the following risk factors and other  information
in this Form 10-K and the documents  incorporated by reference in evaluating the
Company.  If any of the following risks actually occur, the Company's  business,
financial  condition  or results of  operations  could be  materially  adversely
affected.

RISKS RELATED TO OUR BUSINESS AND THE LITIGATION

     We  may be  forced  to  wind  up  the  Company  or  forced  into  insolvent
liquidation.

     The  Company's  current  liabilities  exceed its  current  assets.  Certain
creditors of the Company have deferred payment of amounts owed to them. There is
no assurance  that those  creditors will continue to permit the Company to defer
payments of amounts owed.

     The Company  has  limited  funds to  continue  its  operations.  Unless the
Company is able to raise adequate additional funds to continue its business, the
Company  may be  forced  to  wind  up  the  Company  or  forced  into  insolvent
liquidation under the laws of Bermuda within the next several months.

     We have a history of losses and  anticipate  further  losses,  which  could
cause us to discontinue our business.

     Our business has never had substantial  revenues and has operated at a loss
in each year since our inception in 1953.  We recorded a loss of $1,008,000  for
the year ended  December 31, 2003, a loss of $2,448,000  for the year 2002 and a
loss of $6,585,000  for the year 2001. If we continue to sustain  losses and are
unable to achieve profitability, we may not be able to continue our business and
may have to curtail, suspend or cease operations.

     During the three years ended  December  31,  2003,  we spent  approximately
$3,562,000 on legal  expenses  primarily  for the lawsuits  against the State of
Florida  relating to drilling permits and royalty  interests.  If we continue to
incur  significant  expenses  and are unable to raise  additional  funds to meet
these  expenses,  we may have to cease or  suspend  our  lawsuits  and/or  cease
operations entirely.

     In the unlikely event that we were to receive  drilling  permits related to
the St. George Island prospect or other exploratory  wells, we would be required
to incur a significant  amount of operating  expenditures  to commence  drilling
operations  and  would  need  to  generate   significant   revenues  to  achieve
profitability. We may not be able to achieve or sustain revenues,  profitability

                                       4
<PAGE>

or positive cash flow and cannot assure that profitability, if achieved, will be
sustained.

     Our auditors  have  expressed the view that our negative  working  capital,
     stockholders'  deficit and capital  deficiencies  raise  substantial  doubt
     about our ability to continue as a going concern.

     Our auditors have included an explanatory paragraph in their report for the
year ended December 31, 2003,  indicating  there is substantial  doubt regarding
our ability to continue as a going concern.  The financial  statements  included
elsewhere in this annual report do not include any  adjustments  to asset values
or recorded  liability amounts that might be required in the event we are unable
to continue  as a going  concern.  You should  also see Note 1 to our  financial
statements  regarding the  uncertainty  as to our ability to continue as a going
concern.

     Without additional financing,  we only have enough liquid assets on hand to
     continue to operate the Company for part of the year 2004.

     We believe  that our funds on hand and certain  loan  commitments  from our
directors will be sufficient to permit us to continue to operate through June of
2004.  After that time,  we may have to suspend or cease  operations  unless and
until we can secure  additional  financing.  In 2003  certain of our  directors,
officers,  legal  counsel  and  administrative  consultants  agreed to  continue
deferring  the payment of their  salaries and fees.  At December  31, 2003,  the
amount of  salaries  and fees  deferred  totaled  approximately  $1,054,000.  We
currently do not have any commitments for additional financing. We may be unable
to obtain additional financing in the future on acceptable terms or at all.

     If the  courts  ultimately  rule  that the State of  Florida  may deny us a
     permit  and not  compensate  us for the taking of our  property,  we may be
     unable to continue our business.

     In the  event  that the  courts  determine  that the  State of  Florida  is
entitled to deny Coastal Petroleum a permit without  compensation,  it is likely
that we would be unable to continue our business.

     We may be  unable  to  secure  the  additional  funds  needed  to cover the
     substantial  litigation costs of proving our properties have been taken and
     their value.

     Coastal  Petroleum  filed a claim with the  Florida  Circuit  Court for the
Second  Judicial  Circuit,  that its  property  has been  taken by the  State of
Florida,  and  that  Coastal  Petroleum  is owed  compensation  by the  State of
Florida.  That Court ruled that there was no taking and that no compensation was
owed and the Trial Court's decision was affirmed on Appeal to the First District
Court of  Appeal.  On April 7,  2004,  the  Company  filed a  Petition  for Writ
Certiorari  with  the  United  States  Supreme  Court.  We will  need to  secure


                                       5
<PAGE>

additional funds to cover the costs of any further litigation, which we estimate
will be  substantial.  If we are unable to secure the additional  funds or raise
funds  through the private sale of  additional  common stock needed to cover the
costs of such  litigation,  we might not be able to conclude the  litigation and
might  have to cease the  lawsuits  against  the State of  Florida  without  any
meaningful recovery.

     The State of Florida has far greater  resources than we do to prosecute the
     litigation.

     The State of Florida utilizes  lawyers from the Florida Attorney  General's
Office, the Department of Environmental  Protection and at least two private law
firms to represent its interests in the litigation.  In the event that our funds
are  exhausted  before the  conclusion  of the  litigation,  we may be unable to
conclude the litigation and might be required to cease business.

     If the amount of money we recover  from the State of Florida is  inadequate
     to cover our costs, we may be forced to cease operations.

     Any recovery  that Coastal  Petroleum may receive as a result of a judgment
against  the  State  of  Florida  may be  insufficient  to  cover  the  costs of
prosecuting  the  claims at  trial.  If this  occurs,  we may be forced to cease
operations.

     Coastal  Caribbean is currently a passive foreign  investment  company,  or
     PFIC, for U. S. federal income tax purposes, which could result in negative
     tax consequences to you.

     If, for any taxable  year,  our passive  income or our assets that  produce
passive  income  exceed  levels  provided  by U.S.  law,  we would be a "passive
foreign investment company," or PFIC, for U.S. federal income tax purposes.  For
the years 1987 through 2003, Coastal  Caribbean's passive income and assets that
produce  passive  income  exceeded  those  levels  and for those  years  Coastal
Caribbean  constituted a PFIC.  Based upon Coastal  Caribbean's  current passive
income,  it is likely that Coastal  Caribbean  will be  classified  as a PFIC in
2004.  If  Coastal  Caribbean  is a PFIC  for any  taxable  year,  then our U.S.
shareholders  potentially  would be subject to adverse U.S. tax  consequences of
holding and disposing of shares of our common stock for that year and for future
tax years. Any gain from the sale of, and certain distributions with respect to,
shares of our common stock,  would cause a U.S. holder to become liable for U.S.
federal income tax under Code section 1291 (the interest charge regime). The tax
is  computed by  allocating  the amount of the gain on the sale or the amount of
the  distribution,  as the  case may be,  to each day in the U.S.  shareholder's
holding period. To the extent that the amount is allocated to a year, other than
the year of the  disposition  or  distribution,  in which  the  corporation  was
treated as a PFIC with respect to the U.S.  holder,  the income will be taxed as
ordinary  income at the highest  rate in effect for that year,  plus an interest
charge.


                                       6
<PAGE>


     Please see a discussion of these  consequences  below in Item 5. Market for
the Company's Common Stock and Related Stockholder  Matters. We encourage you to
consult with a personal tax advisor for advice relating to the potential adverse
tax consequences related to an investment in our common shares.

     Our Bye-Laws contain provisions which may limit a shareholder's  efforts to
     influence  our  policies  and  prevent  or delay a change in control of our
     Company.

     Bye-Law  1  provides  that any  matter  to be voted  on at any  meeting  of
shareholders  must be approved not only by a simple majority of the shares voted
at such meeting, but also by a majority of the shareholders present in person or
by proxy and entitled to vote at the meeting. This provision may have the effect
of making it more difficult to take  corporate  action than customary "one share
one vote"  provisions,  because it may not be possible  to obtain the  necessary
majority of both votes.  As a consequence,  Bye-Law 1 may make it more difficult
that a takeover  of the company  will be  consummated,  which could  prevent the
company's  shareholders  from receiving a premium for their shares. In addition,
an owner of a substantial  number of shares of our common stock may be unable to
influence our policies and  operations  through the  shareholder  voting process
(e.g., to elect directors).

     Our Bye-Laws  also  require the approval of 75% of the voting  shareholders
and of the voting shares for the consummation of any business  combination (such
as a merger,  amalgamation or acquisition  proposal) involving our company. This
higher  vote  requirement  may  deter  business   combination   proposals  which
shareholders may consider favorable.

     You may face obstacles to bringing suit in Bermuda against our officers and
     directors.

     We are a Bermuda  company and certain of our  directors  and  officers  are
residents of Bermuda and are not citizens of the United States.  As a result, it
may be difficult  for  investors to effect  service of process on us or on these
directors  and officers  within the United  States or to enforce  against  these
directors  and  officers  judgments  of  U.S.  courts  predicated  on the  civil
liabilities under the federal  securities laws. If investors are unable to bring
such suits,  they may be unable to recover a loss on their investment  resulting
from any violations of the federal securities laws.

     There is no precedent  for, and therefore no assurance  that, the courts in
Bermuda would enforce civil liabilities,  whether in original actions in Bermuda
or in the form of final  judgments  of U.S.  courts,  arising  under the federal
securities  laws against us or the persons  signing this report on Form 10-K. In
addition,  there is no treaty in effect  between the U.S. and Bermuda  providing
for the  enforcement  of civil  liabilities  and there are  grounds  upon  which
Bermuda  Courts may not enforce  judgments of U.S.  courts.  In  addition,  some
remedies available under the laws of U.S. jurisdictions, including some remedies

                                       7
<PAGE>

available under the U. S. federal securities laws, may not be allowed in Bermuda
courts as contrary to that nation's public policy.

     We are unable to pay dividends.

     We have never  declared or paid  dividends  on our common  stock and do not
anticipate  declaring or paying any dividends in the foreseeable future. We plan
to retain  any future  earnings  to reduce our  deficit  accumulated  during the
development  stage of  $39,451,000  at  December  31,  2003 and to  finance  our
operations.

     Any dividends would be subject to a 30% withholding tax.

     We are a  Bermuda  corporation.  Bermuda  currently  imposes  no  taxes  on
corporate  income or capital gains  realized  outside of Bermuda.  However,  any
dividends we receive from Coastal  Petroleum  are subject to a 30% United States
withholding tax.

RISKS RELATED TO OUR INDUSTRY

     The State of Florida  has  stated  that its policy is not to permit oil and
     gas drilling  offshore Florida and the State has denied Coastal Petroleum a
     permit with respect to its St. George's Island prospect.  Consequently,  we
     do not believe  that the State of Florida  will grant  drilling  permits to
     Coastal  Petroleum  with respect to its leases.  In the unlikely event that
     the State ever does grant  Coastal  Petroleum  a drilling  permit,  Coastal
     Petroleum would have to contend with other risks.


     After obtaining a state drilling permit, Coastal Petroleum would have to do
the following:

o    obtain a federal permit;

o    finance  drilling  of the  well  (including  the  cost  of the  recommended
     surety),  which is currently  estimated to cost approximately $5.5 million;
     and

o    begin  drilling  the well  within one year of the date the state  permit is
     issued.

     We may be unable to  obtain  the  necessary  federal  permits  or we may be
unable to finance and commence drilling operations in a timely manner.

     If we fail to discover  and develop  sufficient  oil and gas  reserves,  we
would be unable to  generate  sufficient  revenues  to cover our costs and might
have to curtail, suspend or cease our business operations.


                                       8
<PAGE>

     Drilling  activities  involve  numerous  risks,  including the risk that no
commercially  productive  natural gas or oil reservoirs will be discovered.  The
cost of  drilling,  completing  and  operating  wells  is often  uncertain,  and
drilling operations may be curtailed, delayed or canceled as a result of adverse
conditions  beyond our control.  Poor results from our  exploration and drilling
activities could prevent us from developing sufficient oil and gas reserves at a
commercially acceptable cost.

     Compliance with environmental and other  governmental  regulations could be
     costly.

     Our operations and right to obtain  interests in and hold  properties or to
conduct our business might be affected to an unpredictable extent by limitations
imposed by the laws and  regulations  which are now in effect or which  might be
adopted by the jurisdictions in which we carry on our business.

     Further measures that have been or might be imposed include  increased bond
requirements,  conservation, proration, curtailment, cessation or other forms of
limiting or controlling production of hydrocarbons or minerals, as well as price
controls  or   rationing  or  other   similar   restrictions.   In   particular,
environmental  control and energy  conservation laws and regulations  adopted by
federal,   state  and  local  authorities  may  have  to  be  complied  with  by
leaseholders such as Coastal Petroleum.

     We face  strong  competition  from  larger oil and gas  companies  that may
     impair our ability to carry on operations.

     If  we  receive  the  necessary   state  and  federal  permits  to  conduct
operations,  we will  operate  in the  highly  competitive  areas of oil and gas
exploration,  development and production.  We might not be able to compete with,
or enter into cooperative  relationships with, our potential competitors,  which
include  major  integrated  oil  companies,   substantial   independent   energy
companies,  affiliates of major interstate and intrastate pipelines and national
and  local  gas  gatherers.   If  we  were  unable  to  establish  and  maintain
competitiveness, our business would be threatened.

     Many of our  competitors  possess  greater  financial,  technical and other
resources than we do. Factors which affect our ability to  successfully  compete
in the marketplace include:

o    the financial resources of our competitors;

o    the availability of alternate fuel sources; and

o    the costs related to the extraction and transportation of oil and gas.


                                       9
<PAGE>

Cautionary Statement About Forward-Looking Statements

     In this Form 10-K and the documents that we  incorporate  by reference,  we
make statements that relate to our future plans,  objectives,  expectations  and
intentions that involve risks and uncertainties.  We have based these statements
on  our  current   expectations  and  projections  about  future  events.  These
statements may be identified by the use of words such as "expect," "anticipate,"
"intend,"  "plan,"  "believe"  and  "estimate"  and  similar  expressions.   Any
statements that refer to expectations, projections or other characterizations of
future events or circumstances are forward-looking statements.

     Forward-looking statements necessarily involve risks and uncertainties. Our
actual results could differ  materially  from those discussed in, or implied by,
these  forward-looking  statements.   Factors  that  could  contribute  to  such
differences  include,  but are not  limited  to,  those  discussed  in the "Risk
Factors" section above and elsewhere in this Form 10-K. The factors set forth in
the Risk Factors section and other cautionary  statements made in this Form 10-K
should be read and understood as being applicable to all related forward-looking
statements wherever they appear in this Form 10-K.

     All subsequent written and oral forward-looking  statements attributable to
us are expressly qualified in their entirety by the cautionary  statements.  You
are cautioned not to place undue reliance on these  forward-looking  statements,
which speak only as of their  dates.  We  undertake  no  obligation  to publicly
update or revise  any  forward-looking  statements,  whether  as a result of new
information, future events or otherwise.

Item 1.   Business
          --------

     (a)  General Development of Business.
          -------------------------------
     Coastal Caribbean Oils & Minerals,  Ltd. (Company or Coastal Caribbean),  a
Bermuda  corporation,  has been engaged,  through its majority owned subsidiary,
Coastal  Petroleum Company (Coastal  Petroleum),  in the exploration for oil and
gas reserves.  At December 31, 2003, Coastal Caribbean's principal asset was its
58.84%  interest  in  its  subsidiary  Coastal  Petroleum.  Coastal  Petroleum's
principal  assets are its  nonproducing  oil, gas and mineral leases and royalty
interests  in the State of Florida.  Coastal  Petroleum  has made no  commercial
discoveries  on the lands covered by these  leases.  Between March 1992 and June
2000,  Coastal Petroleum  attempted to obtain a permit from the State of Florida
to drill an exploration well on its Lease 224-A, offshore Florida. Since January
2001,  Coastal Petroleum has been involved in litigation to obtain  compensation
from the  State of  Florida  for the  alleged  taking  by the  State of  Coastal
Petroleum's  Lease  224-A by the  denial of a permit to drill on the  lease.  On
November  15,  2002,  after a two week trial,  the trial court  issued its Final
Judgment  that the  State's  denial of a permit to drill on Coastal  Petroleum's
Lease  224-A  did not  constitute  an  unlawful  taking of  Coastal  Petroleum's
property.  Coastal  Petroleum  Company  filed a notice  of  appeal  of the Final
Judgment to the Florida First  District Court of Appeal on November 18, 2002. On

                                       10
<PAGE>

December 3, 2003,  the appellate  court issued a unanimous  decision,  without a
written opinion,  affirming the trial court's decision. The Court further denied
Coastal's Petition for Clarification,  Rehearing,  Certification and Request for
written  opinion and the decision  became final on January 9, 2004.  On April 7,
2004,  Coastal  filed a Petition for Writ of  Certiorari  with the United States
Supreme  Court  asking the Court to accept  jurisdiction  to consider the action
taken by the trial court as affirmed by the appellate  court. See Item 3. "Legal
Proceedings".

     Coastal  Petroleum is the lessee under State of Florida leases  relating to
the  exploration  for and  production of oil, gas and minerals on  approximately
3,700,000 acres of submerged lands along the Gulf Coast and under certain inland
lakes and rivers.  The leases  provide for a working  interest in  approximately
1,250,000 acres and a royalty interest in approximately  2,450,000 acres covered
by the leases.  Coastal  Petroleum  has made no  commercial  discoveries  on its
leaseholds.

     In 1990, the State of Florida enacted  legislation that prohibits  drilling
or exploration for oil or gas on Florida's  offshore  acreage.  Although the law
does not  apply  to  areas  where  Coastal  Petroleum  is  entitled  to  conduct
exploration,  the State of Florida has  effectively  prevented  any  exploratory
drilling  by  denying  the  Company's  applications  for  drilling  permits.  In
addition,  in those areas where Coastal  Petroleum has only a royalty  interest,
the law also  effectively  prohibits  production  of oil and gas,  rendering  it
impossible for Coastal Petroleum to collect  royalties from those areas.  During
1998,  Coastal  Petroleum  exhausted its legal remedies in its efforts to obtain
compensation for the drilling prohibition on its royalty interest acreage.

     Coastal  Petroleum  has been  involved in various  lawsuits for many years.
Coastal  Petroleum's  current litigation  (Florida  Litigation) now involves one
basic claim:  whether the State's denial of a permit constitutes a taking of its
property. In addition,  Coastal Caribbean is a party to one additional action in
which Coastal  Caribbean claims that certain of its royalty  interests have been
confiscated by the State.  During 2003, the Company actively pursued the Florida
Litigation.

     On October 6, 1999,  the Florida First  District Court of Appeal ruled that
the Florida  Department of  Environmental  Protection (DEP) has the authority to
deny Coastal  Petroleum's  drilling  permit for its St. George Island  prospect,
provided that Coastal  Petroleum  receives just  compensation  for what has been
taken.  The State of Florida and certain Florida  environmental  groups filed on
November 1, 1999 a joint motion for clarification,  rehearing,  or certification
with respect to that decision,  asking the Court of Appeal,  among other things,
to  clarify  that the  question  of  whether  there has been a taking of Coastal
Petroleum's  leases should be determined in the Circuit Court. On June 26, 2000,
the Court of Appeal denied all of the State's  motions and stated that the issue
of whether the denial of a permit constituted a taking was not before the Court.
The Court declined to rule on the merits of the taking issue and stated that the
issue was a matter for the Circuit Court. On January 16, 2001, Coastal Petroleum
filed an inverse  condemnation action in the Circuit Court to be compensated for
the value of its properties. The cost of the litigation has been substantial and

                                       11
<PAGE>

the cost is expected to be substantial in the future.

See  Item  3.  "Legal  Proceedings"  for  a  more  complete  discussion  of  the
litigation.

     (b)  Financial Information About Industry Segments.
          ---------------------------------------------

          Because  the Company has been  engaged in only one  industry,  namely,
oil, gas and mineral exploration and development, this item is not applicable to
the  Company.  See  Item 8 for  general  financial  information  concerning  the
Company.

     (c)  Narrative Description of the Business.
          -------------------------------------

          Coastal  Caribbean was organized in Bermuda on February 14, 1962.  The
Company  is  the  successor  to  Coastal  Caribbean  Oils,  Inc.,  a  Panamanian
corporation  organized on January 31, 1953 to be the holding company for Coastal
Petroleum Company.

          Coastal  Petroleum caused oil and gas exploration to take place on its
leases  prior to the  beginning of  litigation  in 1968 but has  conducted  more
limited exploration since that time. Coastal Petroleum believes all drilling and
exploration  obligations  imposed by its leases have been  satisfied to date. No
commercial oil or gas discoveries have been made on these properties; therefore,
the Company has no proved reserves of oil and gas and has had no production. See
Item 2. "Properties."

        (i)    Principal Products.
               ------------------

               Not applicable.

        (ii)   Status of Product or Segment.
               ----------------------------

               Not applicable.

        (iii)  Raw Materials.
               -------------

               Not applicable.

        (iv)   Patents, Licenses, Franchises and Concessions Held.
               --------------------------------------------------

               See Item 2. "Properties."

               The acreage covered by Coastal  Petroleum's leases is located for
the most part along offshore areas on the Gulf Coast of Florida and in submerged
and unsubmerged lands under certain bays, inlets,  riverbeds and lakes, of which
Lake  Okeechobee is the largest.  Coastal  Petroleum  currently  makes an annual
lease payment of $59,247 to the State of Florida.


                                       12
<PAGE>


        (v)    Seasonality of Business.
               -----------------------

               The Company's business is not seasonal.

        (vi)   Working Capital Items.
               ---------------------

               The majority of the Company's  current  assets are in the form of
cash and cash equivalents.  See Item 8. "Financial  Statements and Supplementary
Data."

        (vii)  Customers.
               ---------

               Not applicable.

        (viii) Backlog.
               -------

               Not applicable.

        (ix)   Renegotiation   of  Profits  or   Termination   of  Contracts  or
               Subcontracts at the Election of the Government.
               -----------------------------------------------------------------

               Not applicable.

        (x)    Competitive Conditions in the Business.
               --------------------------------------

               Competition  in the oil and gas industry is intense.  The Company
must compete with companies which have substantially greater resources available
to them. In addition, the industry as a whole must compete with other industries
in supplying the energy needs of commerce and the general  public.  Furthermore,
competitive conditions may be substantially affected by energy legislation which
may be adopted in the future.

        (xi)   Research and Development.
               ------------------------

               Not applicable.

        (xii)  Environmental Regulation.
               ------------------------

               The  operations  of  Coastal  Caribbean  and its  right to obtain
interests  in and  hold  properties  or to do  business  may be  affected  to an
unpredictable  extent by limitations  imposed by the laws and regulations  which
are now in effect  or which may be  adopted  by the  jurisdictions  in which the
Company  carries on its  business.  Further  measures that have been or might be
imposed   include   increased  bond   requirements,   conservation,   proration,
curtailment,  cessation or other forms of limiting or controlling  production of
hydrocarbons  or  minerals,  as well as price  controls  or  rationing  or other
similar   restrictions.   In  particular,   environmental   control  and  energy
conservation  laws  and  regulations   adopted  by  federal,   state  and  local

                                       13
<PAGE>

authorities  may  have to be  complied  with  by  leaseholders  such as  Coastal
Petroleum.

        (xiii) Number of Persons Employed by Registrant.
               ----------------------------------------

                           The Company currently has one employee. The Company
relies heavily on consultants for legal, accounting,
geological and administrative services. The Company uses consultants because it
believes it is more cost effective than employing a larger full time staff.

     (d)  Financial Information About Foreign and Domestic Operations
          and Export Sales.
          -----------------

              (1) Identifiable Assets.
                  -------------------

                  All of  the Company's assets are located in the United States.
See Item 1(a) "General Development of Business."

                  Since  the Company is a development stage company, the balance
of the  information  required  under this  paragraph  is not  applicable  to the
Company. See Item 8. "Financial Statements and Supplementary Data."

              (2) Risks Attendant to Foreign Operations.
                  -------------------------------------

                  Not applicable.

              (3) Data which are not Indicative of Current or Future Operations.
                  -------------------------------------------------------------
                  Not applicable.




                                       14
<PAGE>

Item 2.   Properties

Properties

     The discussion herein relating to the Company's  properties is qualified in
its entirety by the  discussion in Item. 3 "Legal  Proceedings"  relating to the
Florida Litigation.

     Coastal Petroleum,  a Florida corporation,  holds certain working interests
in  nonproducing  oil, gas and mineral leases covering  approximately  1,250,000
acres, and a royalty interest in approximately  2,450,000 acres, in and offshore
the State of Florida. No commercial oil or gas discoveries have been made on the
properties  covered by these leases and Coastal Petroleum has no proved reserves
of oil or gas and has had no significant production.

     In 1941, Arnold Oil Explorations,  Inc.,  renamed Coastal Petroleum Company
in 1947,  entered into a contract with the Trustees of the Internal  Improvement
Trust Fund of the State of Florida  (Trustees),  in whom title to publicly owned
lands in the State of Florida,  including  bottoms of salt and fresh waters,  is
irrevocably  vested, for the exploration of oil, gas and minerals on such lands.
Pursuant  to an option  to lease in this  contract,  the  Trustees  and  Coastal
Petroleum  entered into three leases between 1944 and 1946. The acreage  covered
by these  leases is located for the most part along  offshore  areas on the Gulf
Coast of Florida and in submerged  lands under certain bays,  inlets,  riverbeds
and lakes, of which Lake Okeechobee is the largest.

     In 1968,  Coastal  Petroleum  sued the  Secretary of the Army of the United
States in a dispute  regarding  certain mineral rights. In 1969, as part of that
litigation,  the  Trustees  claimed  that the leases  were  invalid and had been
forfeited.  Coastal  Petroleum and the Trustees  settled their  disagreement  in
1976.

     Under the terms of the 1976 settlement agreement, the two leases (224-A and
224-B) bordering the Gulf Coast were divided into three areas,  each running the
entire length of the coastline from Apalachicola Bay to the Naples area: (1) The
inner area,  including  rivers,  bays,  and  harbors,  extends  seaward from the
Florida shoreline a distance of 4.36 statute miles (5,280 feet per statute mile)
into the Gulf,  covers  approximately  2.25 million  acres,  and is subject to a
royalty interest payable to Coastal Petroleum. This interest is a 6 1/4% royalty
on the  wellhead  value of all oil and gas,  25  cents  per long ton on  sulfur,
receivable in cash or in kind at Coastal Petroleum's option, and a 5% royalty on
production  or the market value of other  minerals.  (2) The middle area,  three
statute miles wide and covering more than 800,000 acres, was released by Coastal
Petroleum to the Trustees,  and Coastal Petroleum has no further interest in the
area.  (3)  Coastal  Petroleum  presently  owns a 100%  working  interest in the
outside  area,  which  extends  seaward an  additional  three  statute miles and
borders federal offshore acreage.  This area,  exceeding 800,000 acres,  remains
subject to royalties  payable to the State of Florida of 12 1/2% on oil and gas,
$.50 per long ton of sulfur and 10% on other minerals.  The Florida  legislature
has enacted statutes designed to protect the Big Bend Seagrass Aquatic Preserve,
an area  covering  approximately  one  quarter  of Coastal  Petroleum's  working
interest area.  However,  the legislation and legislative  history recognize and

                                       15
<PAGE>

preserve Coastal Petroleum's prior rights as granted by the leases.

     Coastal  Petroleum  retains a 100% working  interest in  450,000-acre  Lake
Okeechobee  which is a part of Lease 248 and which is also  subject to royalties
payable to the State of Florida of 12 1/2% on oil and gas,  $.50 per long ton of
sulfur and 10% on other  minerals.  Pursuant to its settlement with the State of
Florida in 1976, Coastal Petroleum agreed not to conduct  exploration,  drilling
or mining operations on Lake Okeechobee without the prior approval of the State.
As to the balance of this lease,  covering  approximately 200,000 acres, Coastal
Petroleum  retains royalty  interests of 6 1/4% on oil, gas and sulfur and 5% on
other minerals.

     Under the 1976  settlement  agreement  with the Trustees,  the three leases
have a term of 40 years  beginning  from January 6, 1976 and require the payment
of an annual  rental of $59,247,  if oil, gas or minerals are being  produced in
economically sustainable quantities at January 6, 2016, these operations will be
allowed to  continue  until they  become  uneconomic.  Further,  the  settlement
agreement  provides that the drilling  requirements shall be governed by Chapter
20680, Laws of Florida,  Acts of 1941, and that all other drilling  requirements
are waived.  Under the 1941 Act, a lessee is required to drill at least one test
well on lands  leased in each  five-year  period  under  the term of the  lease.
Coastal   Petroleum   believes  it  is  current  in   fulfilling   its  drilling
requirements.  Drilling  requirements of Lease 224-A have been satisfied through
the five year  obligation  period ended August 2, 2004. The State of Florida has
refused Coastal Petroleum the right to drill on Lease 248 since August 10, 1986.

     The  following  charts  reflect the acreage and annual  rental  obligations
resulting  from  the  1976  settlement  agreement  with  the  Trustees  and  the
approximate acreage under lease at December 31, 2003:

                                     Current           Current          Current
                                     Working           Royalty          Annual
Lease                               Interest          Interest          Rental
-----                               --------         ---------        ----------
224-A and 224-B                      800,000         2,250,000        $   39,261
            248                      450,000           200,000            19,986
                                   ---------         ---------        ----------
                                   1,250,000         2,450,000        $   59,247
                                   =========         =========        ==========

                    Acreage under lease at December 31, 2003
                    ----------------------------------------

                              Gross Acres (*)                 Net Acres (**)
                              ---------------                 --------------
                       Undeveloped      Developed     Undeveloped     Developed
                       -----------      ---------     -----------     ---------
Working interest        1,250,000         -0-          1,250,000         -0-
Royalty interest        2,450,000         -0-            153,125         -0-
                        ---------      ---------        --------      ---------
    Total               3,700,000         -0-          1,403,125         -0-
                        =========      =========       =========      =========

*    A gross acre is an acre in which a working interest is owned.
**   A net acre is deemed to exist when the sum of fractional  ownership working
     interests  in gross acres equals one. The number of net acres is the sum of
     the fractional  working  interests  owned in gross acres expressed as whole
     numbers and fractions thereof.


                                       16
<PAGE>

Disclosure Concerning Oil and Gas Operations.

     Since the properties in which the Company has interests are undeveloped and
nonproducing,  items 2 through 4 of Securities Exchange Act Industry Guide 2 are
not applicable.

(5)  Undeveloped Acreage.
     --------------------

     The Company's undeveloped acreage as of December 31, 2003 was as follows:

                                          Gross Acres           Net Acres
                                          -----------           ---------
     Working Interest                       1,250,000           1,250,000
     Royalty Interest                       2,450,000             153,125
                                            ---------            --------
                                Total       3,700,000           1,403,125
                                            =========           =========

(6)  Drilling Activity.
     -----------------

     None

(7)  Present Activities.
     ------------------

     None

(8)  Delivery Commitments.
     --------------------

     None

Royalties and Other Interests
-----------------------------

     In  addition  to  royalties  payable  to the State of  Florida as set forth
above,  Coastal  Petroleum's  leases are subject to several  royalties and other
interests.  The leases are presently subject to overriding royalties aggregating
1/16 as to oil, gas and sulphur and 13/600ths as to minerals other than oil, gas
and sulphur.

     We  also  have  granted  to  certain  officers,   directors,   counsel  and
consultants  of Coastal  Petroleum and Coastal  Caribbean the right to receive a
percentage of the net recoveries from the Florida Litigation. See Item 3. "Legal
Proceedings" and Item 13. "Certain Relationships and Related Transactions."

Mineral Rights
--------------

     Coastal  Petroleum's  Leases  224-A,  224-B  and 248 were  determined  by a
Florida State court in 1960 to cover not only oil, gas and sulphur, but also all
other minerals.  Subsequent litigation has held that these other minerals do not
embrace certain deposits of shell accumulated on water bottoms which had not yet
become  mineral,  and that Lake  Hancock is not within the area covered by Lease
224-B.  Under the 1976 settlement  agreement with the State of Florida,  Coastal
Petroleum retains a 5% royalty with respect to mineral  production.  However, it

                                       17
<PAGE>

cannot conduct mining  operations in 450,000-acre  Lake  Okeechobee  without the
prior approval of the State of Florida. Although Coastal Petroleum had conducted
limited  mineral  exploration  activities  on its leases,  the courts during the
1980's limited its rights to mine minerals. Coastal Petroleum has no independent
knowledge of commercial deposits on its leases.  Furthermore,  Coastal Petroleum
does not  anticipate  that the State  would  allow the open pit mining and heavy
industrial  activity that would be necessary to remove any minerals if they were
to be  present,  given  the  State's  objection  to a  single  bore  hole for an
exploratory oil and gas well.

Item 3.   Legal Proceedings
-------   -----------------

Florida Litigation

     Coastal  Petroleum  has been  involved in various  lawsuits for many years.
Coastal Petroleum's current litigation now involves one basic claim: whether the
State's offshore  drilling policy and its denial of a permit constitute a taking
of Coastal Petroleum's  property.  In addition,  Coastal Caribbean is a party to
another  action in which  Coastal  Caribbean  claims that certain of its royalty
interests have been confiscated by the State.

Drilling Permit Litigation

     In  1992,   Coastal  Petroleum   applied  to  the  Florida   Department  of
Environmental  Protection  (the "DEP") for a permit to drill an exploratory  oil
and gas well off Apalachicola, Florida. The proposed well would be located in an
area included within Lease 224-A.  The DEP  subsequently  denied the application
for issuance of a drilling permit for various reasons and imposed a $1.9 billion
bond.  Coastal  Petroleum  appealed the actions of the DEP to the Florida  First
District Court of Appeal  ("Court of Appeal").  After two decisions by the Court
of Appeal in favor of Coastal Petroleum,  the Florida Supreme Court in July 1996
denied the DEP's petition to review an April 1996 Court of Appeal decision.  The
Florida  Supreme  Court had also  refused to review an  earlier  Court of Appeal
decision.

     On August 16, 1996, the DEP notified Coastal Petroleum that it was prepared
to issue the drilling permit subject to Coastal Petroleum publishing a Notice of
Intent to Issue ("Notice") the permit.  The Notice allowed interested parties to
request administrative hearings on the permit.

     On May 28,  1997,  the Oil and Gas  Drilling  Bill  (SB550)  was enacted in
Florida.  The  legislation  requires  that a surety  be  based on the  projected
cleanup costs and possible  natural  resource  damage  associated  with offshore
drilling  as  estimated  by the DEP  and as  established  by the  Administration
Commission (the "Commission")  which is comprised of the Governor of Florida and
the  Cabinet.  Previously,  the  required  surety was  satisfied by a payment of
$4,000 to the Mineral Trust Fund in the first year,  with a maximum  $30,000 per
year and a payment of $1,500 per well for each subsequent  year. On September 9,
1997,  the  State of  Florida  set a new  surety  amount of $4.25  billion  as a
precondition for the issuance of the drilling permit.


                                       18
<PAGE>

     On October 20, 1997, a public  hearing on the permit  application  convened
and concluded on November 6, 1997. The hearing  included the Company's appeal of
the $4.25 billion surety requirement. On April 8, 1998, a Florida Administrative
Law Judge  recommended that Coastal  Petroleum was entitled to a drilling permit
with the requirement of a $225 million  surety.  On May 13, 1998, the Commission
rejected  the  $225  million   surety  and  remanded  the   proceedings  to  the
Administrative Law Judge with instructions to recalculate the surety amount.

     On May 22, 1998, the DEP denied the permit to Coastal Petroleum to drill an
offshore  exploration well near St. George's Island.  Coastal Petroleum appealed
both the denial of the permit by the DEP and the imposition of the surety to the
Court of Appeal.

     On  October  6,  1999,  the  Court  of  Appeal  ruled  that the DEP has the
authority to deny Coastal Petroleum's  drilling permit for its St. George Island
prospect,  provided that Coastal  Petroleum  receives just compensation for what
has been taken.  The State of Florida and certain Florida  environmental  groups
filed on  November  1, 1999 a joint  motion  for  clarification,  rehearing,  or
certification with respect to that decision,  asking the Court of Appeal,  among
other things, to clarify that the question of whether there has been a taking of
Coastal  Petroleum's  leases should be determined in the Circuit Court.  On June
26, 2000, the Court of Appeal denied all of the State's  motions and stated that
the issue of whether  the  denial of a permit  constituted  a  "taking"  was not
before the Court.  The Court  declined to rule on the merits of the taking issue
and stated that the issue was a matter for the Circuit Court.

Lease Taking Case (Lease 224-A)

     On January 16, 2001, Coastal Petroleum filed a complaint in the Leon County
Circuit Court, Florida against the State of Florida seeking compensation for the
State's  taking of its  property  rights to  explore  for oil and gas within its
state Lease 224-A.  The lease  encompasses  more than 400,000 acres off the West
coast of Florida in the Gulf of Mexico.  In its complaint,  Coastal reserved the
right to raise any  federal  claims  that it had a right to bring based upon the
State's  actions,  so that such  claims  could be brought  in  federal  court if
necessary.

     In that case, Coastal Petroleum claimed that the State of Florida has taken
Lease  224-A  by  denying  Coastal  Petroleum  a permit  to  drill  an  offshore
exploration  well near St. George  Island in the Gulf of Mexico.  The history of
the litigation  between Coastal  Petroleum and the State of Florida  relating to
the  denial of the  drilling  permit is set forth  under the  caption  "Drilling
Permit  Litigation."  Coastal Petroleum maintains that the State has effectively
taken  Coastal  Petroleum's  lease  by  depriving  Coastal  Petroleum  of all or
substantially  all  of the  economically  viable  use  of  its  constitutionally
protected property.

     On October 8,  2002,  after a two week trial the trial  court in the taking
litigation  orally  ruled from the bench that the State's  denial of a permit to
drill on Coastal  Petroleum's  Lease 224-A did not constitute an unlawful taking
of Coastal  Petroleum's  property.  On November 15, 2002, the trial court issued
its Final  Judgment  that the  State's  denial  of a permit to drill on  Coastal

                                       19
<PAGE>

Petroleum's  Lease  224-A did not  constitute  an  unlawful  taking  of  Coastal
Petroleum's property.

     Coastal Petroleum Company filed a notice of appeal of the Final Judgment to
the Florida  First  District  Court of Appeal on November 18, 2002 and filed its
initial appeal brief on January 27, 2003. The intervenors  (as described  below)
joined the appeal of the Final  Judgment and appealed the ruling on their motion
to intervene.  After all briefs were  submitted,  oral  arguments  were heard on
November  19,  2003.  On December 3, 2003 the Florida  First  District  Court of
Appeals'  affirmed the trial  court's  Judgment.  In December,  2003 the Company
filed a Motion for  Clarification,  Rehearing,  Certification  and Request for a
Written  Opinion as to the  Court's  per curiam  decision  issued on December 3,
2003.  In January,  2004,  the Court  denied this Motion,  the Court's  decision
affirming the trial court's final judgment  finding no taking of Coastal's State
Drilling Lease 224-A, became final.

     On April 7, 2004,  Coastal filed a Petition for Writ of Certiorari with the
United States Supreme Court asking the Court to accept  jurisdiction to consider
the action taken by the trail court as affirmed by the  appellate  court.  After
jurisdictional  briefs are submitted  the Court will decide  whether to exercise
its jurisdiction and if so briefs on the merits will be required.

     On December  13,  2002,  the State filed a motion for an order by the trial
court by which the State  seeks to  recover  $178,315  from  Coastal  Petroleum,
including  expert witness fees,  deposition costs and copying costs. On December
20,  2002,  Coastal  Petroleum  filed  objections  and  responses to the State's
motion,  objecting to the costs and  requesting an evidentiary  hearing.  In the
opinion of Company's  litigation counsel,  the State's motion for fees and costs
is without  merit.  On April 9, 2003,  the State agreed not to pursue its motion
until  after  conclusion  of the appeal in this  case.  An award of costs by the
trial court against Coastal Petroleum could be appealed by either party. Coastal
Petroleum  also would have the right to seek an automatic stay of any cost award
rendered against it pending appeal of the award, by the posting of a bond deemed
sufficient by the trial court.

Ancillary Matters to Lease Taking Case

     On February 13, 2001,  certain  holders of  royalties  pertaining  to Lease
224-A filed a Motion to Intervene as Additional  Plaintiffs.  On April 24, 2001,
the Leon County  Circuit  trial  judge  granted  certain  royalty  holders  with
overriding royalties, which aggregate approximately 4% on State Lease 224-A, the
right to intervene on a limited basis in the takings lawsuit.

     Counsel for the appealing  royalty  holders has advised  Coastal  Petroleum
that the royalty holders' position is that their interest is worth substantially
more than 4% of whatever  judgment  may be awarded to Coastal  Petroleum  in the
litigation  and that they intend to make a claim  against any  recovery  Coastal
Petroleum may obtain in the litigation.  Coastal Petroleum  informed the Circuit
Court and counsel for the royalty  holders that Coastal  Petroleum is not making
any claim in the  litigation  on behalf of any interest the royalty  holders may
have.


                                       20
<PAGE>


No Assurances

     There is no assurance  that Coastal  Petroleum  will be  successful  on the
merits of its claims, which the State of Florida is vigorously defending.  There
is also no assurance that Coastal Petroleum will receive a ruling that its Lease
224-A has been  taken or that if  compensation  is awarded it will be awarded in
the amount sought by Coastal Petroleum.

Other Permit Applications

     On February 25, 1997 Coastal Petroleum filed 12 additional applications for
drilling permits.  Coastal Petroleum objected to certain requests for additional
data by the Florida DEP and the  permits  were  denied.  On March 26,  1999,  an
administrative  law  judge  upheld  the  DEP's  requirements  and  denial of the
permits.  The  First  District  Court of Appeal  affirmed  the  decision  of the
administrative law judge on February 29, 2000.

     In order to more fully permit the  Apalachicola  Reef Play,  which includes
the St. George Island  prospect,  on October 29, 1998,  Coastal  Petroleum filed
four  additional  permit  applications  (1310-1313).   The  DEP  also  requested
additional data for these applications.  As of March 18, 2004, Coastal Petroleum
had not yet submitted the requested data.  Although these applications are still
pending,  Coastal  Petroleum  does not  believe  the DEP will ever  grant  these
permits.

Coastal Caribbean Royalty Litigation

     The offshore areas covered by Coastal Petroleum's original leases (prior to
the 1976  Settlement  Agreement) are subject to certain other royalty  interests
held by third parties,  including Coastal Caribbean.  On April 20, 1994, several
of those third parties,  including Coastal Caribbean,  which has approximately a
12% interest in any recovery,  have  instituted a separate  lawsuit  against the
State of Florida in the 5th Judicial  Circuit in Hernando  County.  That lawsuit
claims that the royalty holders'  interests have been confiscated as a result of
the State's  actions  discussed above and that they are entitled to compensation
for that taking.  The royalty  holders  were not parties to the 1976  Settlement
Agreement,  and the royalty  holders  contend  that the terms of the  Settlement
Agreement do not protect the State from taking claims by those royalty  holders.
The case was subsequently transferred to the 2nd Judicial Circuit in Leon County
and it is still pending before the Circuit Court in  Tallahassee.  The State has
filed a motion for  summary  judgment  but no hearing  date has been set for the
motion.  Discovery  is  proceeding.  Any recovery  made in the royalty  holders'
lawsuit would be shared among the various plaintiffs in that lawsuit,  including
Coastal Caribbean, but not Coastal Petroleum.

Lease Taking Case (Lease 224-B)
-------------------------------

     On May 21,  2002,  Coastal  Petroleum  filed a complaint in the Leon County
Circuit Court, Florida against the State of Florida seeking compensation for the
State's  alleged taking of its property rights to explore for oil and gas within
its State Lease 224-B.  The lease  encompasses  more than 400,000  acres off the
West Coast of Florida in the Gulf of Mexico.  On July 22,  2002, a motion by the
State of Florida to dismiss  the case was heard.  The court  denied the  State's

                                       21
<PAGE>

motion to dismiss the case and the case is currently pending and is still in the
discovery stage.

     On March 28, 2003,  the State filed a motion to stay the  proceeding  until
the appeal of Lease  224-A is  completed.  A hearing  before the trial judge was
held on May 1, 2003, at which  Coastal  objected to the stay unless the stay was
conditioned upon the suspension of Coastal's lease obligation.  The judge denied
the motion to stay and discovery is still proceeding.

Counsel

     The Tampa,  Florida  law firm of Gaylord  Merlin  Ludovici  Diaz & Bain was
Coastal  Petroleum's  principal  trial  counsel in Coastal  Petroleum's  inverse
condemnation  claim against the State of Florida in Florida  Circuit Court.  Mr.
Cary Gaylord was the lead attorney for Gaylord Merlin. Mr. Gaylord,  age 56, has
extensive experience in eminent domain and property rights matters. He is a 1969
graduate  of the United  States  Military  Academy  and a 1974  graduate  of the
University of Florida Law School.

     In addition,  Mr. Robert J. Angerer of the law firm of Angerer & Angerer of
Tallahassee, Florida assisted Gaylord Merlin in the litigation. Mr. Angerer, age
56, is a 1969 graduate of the University of Michigan and received his law degree
with high honors from Florida State  University in 1974. Mr. Angerer was elected
a member of the Board of Directors of Coastal Caribbean and of Coastal Petroleum
on January  30,  2003 and a Vice  President  of Coastal  Caribbean  and  Coastal
Petroleum on February 28, 2003.  Angerer & Angerer is the  principal  counsel in
the appeal of the Taking Case (Lease 224-A) and the  principal  trial counsel in
Coastal Petroleum's inverse condemnation claim regarding Lease 224-B.

Statutory Attorneys' Fees

     Chapter 73 of Florida law  provides in eminent  domain  proceedings  (which
would include Coastal  Petroleum's  taking claim) that, in addition to the award
made to the property owner,  the court shall award  attorneys' fees based on the
difference  between the final judgment or settlement and the first written offer
made to the  property  owner by the  State  in  accordance  with  the  following
schedule:

          1.   Thirty-three percent of any difference up to $250,000; plus
          2.   Twenty-five  percent  of any  portion of the  difference  between
               $250,000 and $1 million; plus
          3.   Twenty  percent of any  portion of the  difference  exceeding  $1
               million.

As of December 31, 2003, no such written offer has been made.

Contingency Fees

     In  1990,  Coastal  Petroleum   considered  that  the  following  firms  or
individuals were important to the success of the litigation against the State of
Florida and agreed to pay them an aggregate of 8.65% in contingent fees based on

                                       22
<PAGE>

any  net  recovery  from  execution  on or  satisfaction  of  judgment  or  from
settlement of the Florida litigation:

                                         Relationship to                Net
                                        Coastal Petroleum             Recovery
              Holder                     at Date of Grant            Percentage
      ---------------------------    ------------------------        ----------

         Reasoner, Davis & Fox            Special Counsel               2.00
           Robert J. Angerer            Litigation Counsel              1.50
           Benjamin W. Heath           Chairman of the Board            1.25
            Phillip W. Ware                  President                  1.25
          Murtha Cullina LLP           Securities Counsel to            1.00
                                        Coastal Caribbean
      Ausley & McMullen, P.A. (*)         Special Counsel                .75
            James R. Joyce              Assistant Treasurer              .30
          Arthur B. O'Donnell        Vice President/Treasurer            .30
           James J. Gaughran                 Secretary                   .30
                                                                        ----
                 Total                                                  8.65
                                                                        ====

     (*)  Interest was granted in 1996.

     In  addition,  Coastal  Petroleum  has  agreed  to  pay  Gaylord  Merlin  a
contingent fee in connection with compensation  awarded to Coastal Petroleum for
the taking of Lease 224-A, Lease 224-B and Lease 248 equal to the greater of:

     (a)  approximately 90% of the statutory award of attorneys' fees (discussed
above), less the hourly fees paid to Gaylord Merlin, or

     (b) ten  percent  of the first  $100  million  or  portion  thereof  of the
compensation  received by Coastal  Petroleum from the State as compensation  for
the taking of its property,  plus five percent of such compensation in excess of
$100 million, less

          (i)  the hourly fees paid to Gaylord Merlin and

          (ii) other costs of the litigation as follows:

               (a)  if  compensation  to  Coastal  Petroleum  is less  than  $55
                    million, there shall be no deduction of other costs;

               (b)  if compensation to Coastal  Petroleum is equal to or greater
                    than $55 million,  then for each $5 million  increase  there
                    shall be a  deduction  of $200,000 of other costs up to $100
                    million;

               (c)  for each $5  million  increase  in  compensation  to Coastal
                    Petroleum over $100 million up to total compensation of $160
                    million,  there  shall be a  deduction  of $100,000 of other
                    costs; and


                                       23
<PAGE>

               (d)  for  compensation  to Coastal  Petroleum  over $160 million,
                    there  shall be a deduction  of all costs of the  litigation
                    which  are not  recovered  from the State  (which  shall not
                    include any fees of Mr. Angerer or Mr. Aurell).

Uncertainty

     Coastal  Petroleum  and/or Coastal  Caribbean may not prevail on any of the
issues set forth above and may not recover compensation for any of their claims.
In  addition,  even if  Coastal  Petroleum  were to prevail on any or all of the
issues to be  decided,  Coastal  Caribbean  or  Coastal  Petroleum  may not have
sufficient  financial resources to survive until such decisions become final. In
the unlikely event that the State of Florida were to grant a permit to drill any
wells for which  applications  have been  filed,  the wells  drilled  may not be
successful  and  may  not  lead to  production  of any oil or gas in  commercial
quantities.

Item 4.   Submission of Matters to a Vote of Security Holders
------    ---------------------------------------------------

          None.




















                                       24
<PAGE>




                                     PART II

Item 5.   Market for the Company's Common Stock and Related
------    -------------------------------------------------
          Stockholder Matters
          -------------------

     (a)  Market Information.

     The   principal   market  for  the   Company's   common  stock  is  in  the
over-the-counter  market on the  "Electronic  Bulletin  Board"  of the  National
Association of Securities Dealers, Inc. under the symbol COCBF.OB. The quarterly
high and low closing prices on the Electronic Bulletin Board during the last two
years were as follows:

     On  February  13,  2003,  Coastal  Caribbean'  shares of common  stock were
delisted  from  trading on the  Boston  Stock  Exchange  because  the  Company's
shareholders' equity was less than the $1,000,000 minimum amount required by the
Exchange.

--------------------------------------------------------------------------------

2002         1st quarter       2nd quarter       3rd quarter       4th quarter
----         -----------       -----------       -----------       -----------

High          $  1.02               .91               .96              .70
Low           $   .76               .57               .42              .16
--------------------------------------------------------------------------------

2003         1st quarter       2nd quarter       3rd quarter       4th quarter
----         -----------       -----------       -----------       -----------

High          $  .25                .16               .51              .45
Low           $  .10                .09               .16              .05
--------------------------------------------------------------------------------

     (b)  Holders.
          -------

     The approximate  number of record holders of the Company's  common stock at
March 18, 2004 was 8,200.

     (c)  Dividends.
          ---------

     The Company has never declared or paid dividends on its common stock and it
does not anticipate declaring or paying any dividends in the foreseeable future.
The  Company  plans  to  retain  any  future  earnings  to  reduce  the  deficit
accumulated during the development stage of $39,451,292 at December 31, 2003 and
to finance its operations.

     The  Company's  Memorandum  of  Association  and Bye-laws do not permit the
Company to repurchase or redeem shares of its common stock.

                                       25
<PAGE>

     Foreign Exchange Control Regulations
     ------------------------------------

     The  Company is subject to the  applicable  laws of The  Islands of Bermuda
relating to exchange  control,  but has the  permission of the Foreign  Exchange
Control of Bermuda to carry on business in, to receive, disburse and hold United
States  dollars  and dollar  securities  under its  designation  as an  External
Account Company.  The Company has been advised that, although as a matter of law
it is possible for such designation to be revoked, there is little precedent for
revocation under Bermuda law.

     Income and Withholding Taxes
     ----------------------------

     Coastal  Caribbean is a Bermuda  corporation.  Bermuda currently imposes no
taxes on corporate  income or capital  gains  realized  outside of Bermuda.  Any
amounts  received by Coastal  Caribbean from United States sources as dividends,
interest,  or other fixed or determinable annual or periodic gains,  profits and
income, will be subject to a 30% United States withholding tax. In addition, any
dividends from its domestic subsidiary,  Coastal Petroleum, will not be eligible
for the 100% dividends received  deduction,  which is allowable in the case of a
United States parent corporation.  Shares of the Company held by persons who are
citizens or  residents  of the United  States are subject to federal  estate and
gift and local inheritance taxation. Any dividends received by such persons will
also be subject to federal, State and local income taxation. The foregoing rules
are of general application only, and reflect law in force as of the date of this
report.

     A  convention  between  Bermuda  and the United  States  relating to mutual
assistance on tax matters became operative in 1988.

     Passive Foreign Investment Company Rules
     ----------------------------------------

     The Internal  Revenue Code of 1986, as amended,  provides special rules for
distributions  received by U.S. holders on stock of a passive foreign investment
company (PFIC),  as well as amounts received from the sale or other  disposition
of PFIC stock.

     Under the PFIC rules, a non-U.S.  corporation  will be classified as a PFIC
for U.S.  federal  income  tax  purposes  in any  taxable  year in which,  after
applying certain look-through rules, either (1) at least 75 percent of its gross
income is passive  income or (2) at least 50  percent of the gross  value of its
assets is attributable to assets that produce passive income or are held for the
production of passive income.

     Passive income for this purpose  generally  includes  dividends,  interest,
royalties,  rents,  and gains  from  commodities  and  securities  transactions.
Special  rules  apply in cases  where a foreign  corporation  owns  directly  or
indirectly at least a 25 percent interest in a subsidiary, measured by value. In
this case, the foreign corporation is treated as holding its proportionate share
of the assets of the subsidiary and receiving  directly its proportionate  share
of the income of the subsidiary  when  determining  whether it is a PFIC.  Thus,
Coastal  Caribbean  would be deemed to receive  its pro rata share of the income
and to hold its pro rata share of the assets, of Coastal Petroleum.


                                       26
<PAGE>

     Based on certain  estimates  of its gross  income and gross  assets and the
nature of its business,  Coastal Caribbean would be classified as a PFIC for the
years 1987 through 2002. Once an entity is considered a PFIC for a taxable year,
it will be  treated  as such for all  subsequent  years  with  respect to owners
holding the stock in a year that it was classified as a PFIC under the income or
asset test described  above.  Whether the Company will be a PFIC under either of
these tests in future years will be difficult to determine because the tests are
applied annually.  Based upon Coastal  Caribbean's current passive income, it is
likely that Coastal Caribbean will be classified as a PFIC in 2004.

     If Coastal  Caribbean is classified as a PFIC with respect to a U.S. holder
any gain from the sale of, and certain  distributions with respect to, shares of
our common stock,  would cause a U.S.  holder to become liable for U.S.  federal
income tax under Code  section 1291 (the  interest  charge  regime).  The tax is
computed by  allocating  the amount of the gain on the sale or the amount of the
distribution,  as the case may be, to each day in the U.S. shareholder's holding
period.  To the extent that the amount is  allocated  to a year,  other than the
year of the disposition or distribution, in which the corporation was treated as
a PFIC with  respect to the U.S.  holder,  the income  will be taxed as ordinary
income at the highest rate in effect for that year, plus an interest charge. The
interest charge would generally be calculated as if the distribution or gain had
been  recognized  ratably  over the  U.S.  holder's  holding  period  (for  PFIC
purposes)  for the shares.  To the extent an amount is  allocated to the year of
the disposition or distribution, or to a year before the first year in which the
corporation  qualified  as a PFIC,  the  amount  so  allocated  is  included  as
additional gross income for the year of the disposition or distribution.  A U.S.
holder  also would be  required  to make an annual  return on IRS Form 8621 that
describes  any  distributions  received  with respect to our shares and any gain
realized on the sale or other disposition of our shares.

     As an  alternative to taxation  under the interest  charge  regime,  a U.S.
holder  generally can elect,  subject to certain  limitations,  to annually take
into gross income the  appreciation  or depreciation in our common shares' value
during  the tax year  (mark-to-market  election).  If a U.S.  holder  makes  the
mark-to-market   election,   the  U.S.   holder  will  not  be  subject  to  the
above-described  rule.  Instead,  if a  U.S.  holder  makes  the  mark-to-market
election, the U.S. holder recognizes each year an amount equal to the difference
as of the close of the taxable year between the U.S.  holder's fair market value
of the common shares and the adjusted basis in the common  shares.  Losses would
be allowed only to the extent of net gain previously included by the U.S. holder
under the mark-to-market  election for prior taxable years.  Amounts included in
or deducted from income under the  mark-to-market  election and actual gains and
losses  realized upon the sale or disposition  of the common shares,  subject to
certain  limitations,  will be  treated  as  ordinary  gains or  losses.  If the
mark-to-market election is made for a year other than the first year in the U.S.
holder's  holding period in which the  corporation  was a PFIC, the first year's
mark-to-market  inclusion, if any, is taxed as if it were a distribution subject
to the interest charge regime discussed above.

     Another  alternative  election which would allow a U.S.  holder to elect to
take its pro rata share of Coastal Caribbean's  undistributed  income into gross
income  as it is  earned by  Coastal  Caribbean  (QEF  election)  would  only be
available to a U.S. holder if Coastal Caribbean provided certain  information to

                                       27
<PAGE>

the   shareholders  of  Coastal   Caribbean.   Coastal   Caribbean  has  had  no
undistributed  income for the years 1987  through  2002.  If the QEF election is
made in a year other than the first year of the U.S.  holder's holding period in
which the foreign corporation is a PFIC, both the QEF regime and interest charge
regime  can  apply,  unless a  special  election  is made.  Under  this  special
election,  the  taxpayer  is  treated as if it  disposed  of its PFIC stock in a
transaction subject to the interest charge rules to the extent gain is deemed to
be  recognized.  Once this election is made,  the holder will be subject only to
the QEF regime.

          Recent Sales of Unregistered Securities
          ---------------------------------------

          None

Item 6.   Selected Consolidated Financial Information
------    -------------------------------------------

     The following  selected  consolidated  financial  information (in thousands
except for per share  amounts) for the Company  insofar as it relates to each of
the five years in the period ended December 31, 2003 has been extracted from the
Company's consolidated financial statements.


<TABLE>
                                                                       Years ended December 31,
                                                     ---------------------------------------------------------
                                                        2003        2002        2001        2000        1999
                                                     ---------   ---------   ---------   ---------   ---------

<S>                                                  <C>         <C>         <C>         <C>         <C>
Net loss                                             $  (1,008)  $  (2,448)  $  (6,585)  $  (1,386)  $  (1,105)
                                                     =========   =========   =========   =========   =========

Net loss per share  (basic and diluted)                   (.02)       (.05)       (.15)       (.03)       (.03)
                                                     =========   =========   =========   =========   =========

Cash and cash equivalents and
 marketable securities                                       3         292         609       2,959       1,042
                                                     =========   =========   =========   =========   =========

Unproved oil, gas and, mineral
 properties (full cost method)                               -           -           -       4,145       4,097
                                                     =========   =========   =========   =========   =========

Total assets                                                91         707       1,077       7,497       5,544
                                                     =========   =========   =========   =========   =========

Shareholders' equity:
 Common stock                                            5,545       5,545       5,216       5,216       4,807
 Capital in excess of par value                         32,138      32,068      31,498      31,498      28,693
 Deficit accumulated during the
 development stage                                     (39,451)    (38,443)    (35,996)    (29,410)    (28,025)
                                                     ---------   ---------   ---------   ---------   ---------
Total shareholders' (deficit) equity                 $  (1,768)  $    (830)  $     718   $   7,304   $   5,475
                                                     =========   =========   =========   =========   =========


Common stock shares outstanding
 (weighted average)                                     44,734      44,734      43,468      40,844      40,056
                                                     =========   =========   =========   =========   =========
</TABLE>



                                       28
<PAGE>



Item 7.   Management's Discussion and Analysis of Financial Condition
          -----------------------------------------------------------
          and Results of Operations
          -------------------------

     Statements  included in  Management's  Discussion and Analysis of Financial
Condition  and  Results of  Operations  which are not  historical  in nature are
intended to be forward looking  statements.  The Company  cautions  readers that
forward looking  statements are subject to certain risks and uncertainties  that
could cause  actual  results to differ  materially  from those  indicated in the
forward looking  statements.  For a discussion of certain risk factors affecting
the Company, please see "Risk Factors" above.

Critical Accounting Policies
----------------------------

     The Company  follows the full cost method of accounting for its oil and gas
properties.  All costs  associated  with property  acquisition,  exploration and
development activities whether successful or unsuccessful are capitalized. Since
the Company's  properties were  undeveloped and  nonproducing and the subject of
litigation,  capitalized costs were not being amortized,  however, as more fully
described in Note 3, these costs were written off in 2001.

     The capitalized  costs are subject to a ceiling test which basically limits
such costs to the aggregate of the estimated  present value  discounted at a 10%
rate of future net revenues from proved reserves,  based on current economic and
operating  conditions,  plus the lower of cost or fair market  value of unproved
properties. The Company assesses whether its unproved properties are impaired on
a periodic basis. This assessment is based upon work completed on the properties
to  date,  the  expiration  date of its  leases  and  technical  data  from  the
properties  and  adjacent  areas.  These  properties  are  subject to  extensive
litigation with the State of Florida.

     During the year 2001, the Company  concluded that its leases had been taken
and its property  interests  were  impaired by the actions taken by the State of
Florida and  therefore,  had recorded an impairment  charge to reflect the write
off of the costs of  unproved  oil,  gas and  minerals  properties.  See Note 4.
Litigation. All costs incurred in 2002 and 2003 in connection with the Company's
Florida leases have been expensed as incurred (as will be all future costs).

     (1)  Liquidity and Capital Resources
          -------------------------------

     Statements  included in  Management's  Discussion and Analysis of Financial
Condition  and  Results of  Operations  which are not  historical  in nature are
forward looking  statements.  The Company  cautions readers that forward looking
statements  are  subject to certain  risks and  uncertainties  that could  cause
actual results to differ  materially from those indicated in the forward looking
statements. Among the risks and uncertainties are:

     1.   the uncertainty of any decision  favorable to Coastal Petroleum in its
          litigation against the State of Florida;


                                       29
<PAGE>

     2.   the substantial cost of continuing the litigation;

As  more  fully  described  in  Notes  1 and  4 to  the  consolidated  financial
statements, we have a working capital deficiency, have incurred recurring losses
and have a deficit  accumulated  during the development  stage. We have been and
continue  to be  involved  in several  legal  proceedings  against  the State of
Florida which has limited our ability to commence development  activities on our
unproven oil and gas  properties  or obtain  compensation  for certain  property
rights we believe have been taken.  These  situations  raise  substantial  doubt
about our ability to continue as a going  concern.  Our  consolidated  financial
statements do not include any adjustments to reflect the possible future effects
on the recoverability and classification of assets or amounts and classification
of liabilities which may result from the outcome of this uncertainty.

                                    Liquidity

     In July  2002  Coastal  Caribbean  concluded  a  rights  offering  and sold
2,743,275 shares of common stock for $.50 per share and received net proceeds of
approximately $900,000.

     At December 31, 2003,  Coastal Caribbean had  approximately  $3,000 of cash
and cash  equivalents  available.  In  addition,  the  Company  has  received  a
commitment from some of its Directors to loan the Company funds which management
believes  should be  sufficient to fund the  Company's  operations  through June
2004,  provided  that payments to the  Company's  litigation  counsel and to the
Company's  salaried  employee are deferred and provided further that payments to
other Company counsel are also deferred.

     Coastal Caribbean has a working capital deficiency, has a limited amount of
cash and cash  equivalents,  has  incurred  recurring  losses  and has a deficit
accumulated during the development stage.  Certain  directors,  officers,  legal
counsel and administrative consultants have agreed to defer the payment of their
salaries and fees.  At December 31, 2003,  the amount of salaries and fees being
deferred  totaled  approximately  $1,054,000.  After the filing of the 10-K, the
Company  may  have to  suspend  or  cease  operations  and may  have to file for
bankruptcy  under the laws of Bermuda  unless and until the  Company  can secure
additional funds for operations.

     Since October 2002,  Coastal Caribbean and Coastal Petroleum have attempted
to raise funds from the other shareholders of Coastal Petroleum and from others.
In March 2003 Coastal  Petroleum sold two shares of its common stock for $25,000
per share to a  non-shareholder  of Coastal  Petroleum  and in  October  Coastal
Petroleum  sold two  shares  of its  common  stock for  $10,000  per share to an
existing  shareholder of Coastal Petroleum.  Other than these sales,  Management
has been unsuccessful at raising additional funds.

     (2)  Results of Operations
          ---------------------

     The Company,  a development  stage  enterprise,  has never had  substantial
revenues  and has  operated  at a loss each year  since its  inception  in 1953.
During the three years ended December 31, 2003, the Company spent  approximately
$3,562,000 on legal  expenses  primarily  for the lawsuits  against the State of

                                       30
<PAGE>

Florida relating to drilling permits and royalty interests.

2003 vs. 2002
-------------

     The Company incurred a loss of $1,008,000 for the year 2003,  compared to a
loss of $2,488,000 for the year 2002.

     Interest  income  and other  income  decreased  91% in 2003 to $1,000  from
$7,000 in 2002 because less funds were  available for investment and due in part
to lower interest rates.

     Legal fees and costs  decreased 78% in 2003 to $342,000 from  $1,549,000 in
2002.  Legal fees and costs  decreased  in 2003 as  compared  with 2002 due to a
reduction  in  expenditures  for legal fees and  geological  experts  related to
Company's  lawsuit  against the State of Florida  seeking  compensation  for the
State's  alleged taking of its property rights to explore for oil and gas within
its state Lease 224-A.

     Administrative  expenses decreased 29% in 2003 to $458,000 from $662,000 in
2002 primarily because of a reduction in Accounting and administrative  expenses
and other  corporate  expenses  associated  with the  closing  of the New Jersey
offices.

     Salaries  expense  decreased  32% in 2003 to $119,000 from $152,000 in 2002
due to the reduction in personnel from two individuals to one.

     Shareholder  communications  decreased 5% in 2003 from $31,000  compared to
$32,000 in 2002.  These costs remain low because there was no annual  meeting of
shareholders held in 2003 or 2002.

     Write off of unproved  properties  totaled  $59,000 in 2003 and 2002 as the
Company  has  concluded  that the  value of its  leases  had been  taken and its
property  interests  had been impaired by actions taken by the State of Florida.
All costs incurred in 2003 in connection with the Company's  Florida leases have
been and all future costs will be expensed as incurred.

2002 vs. 2001
-------------

     The Company incurred a loss of $2,488,000 for the year 2002,  compared to a
loss of $6,585,000 for the year 2001.

     Interest  income and other  income  decreased  91% from  $78,000 in 2001 to
$7,000 in 2002 because less funds were  available for investment and in part due
to lower interest rates.

     Legal fees and costs decreased 7% to $1,549,000 for 2002 from $1,670,000 in
2001.  Legal fees and costs  decreased  in 2002 as  compared  with 2001 due to a
reduction in  expenditures  for legal fees and fees paid to  geological  experts
consulted in  preparation  for the trial of the  Company's  lawsuit  against the
State of Florida  seeking  compensation  for the State's  alleged  taking of its

                                       31
<PAGE>

property  rights to explore for oil and gas within its state Lease  224-A.  This
reduction  was  partially  offset by an  increase  in costs  incurred  for legal
services directly connected with the trial which took place in September 2002.

     Administrative  expenses increased 24% in 2002 to $662,000 from $534,000 in
2001 primarily because of a $72,000 increase in the cost of liability insurance.
Also,  Accounting  and  Administrative  costs  increased  because of  additional
services required in connection with the Florida Litigation.

     Salaries  did not change  during the  periods  and  remained at $152,000 in
2002.

     Shareholder  communications  costs decreased to $32,000 in 2002 compared to
$106,000 in 2001 because  there was no annual  meeting of  shareholders  held in
2002.

     Write off of  unproved  properties  totaled  $59,000  in 2002  compared  to
$4,202,000 in 2001.  During the year 2001, the Company  concluded that the value
of its leases had been taken and its  property  interests  had been  impaired by
actions taken by the State of Florida and therefore,  had recorded an impairment
charge to reflect the write off of these  costs.  All costs  incurred in 2002 in
connection with the Company's Florida leases have been and all future costs will
be expensed as incurred.


Item 7A.  Quantitative and Qualitative Disclosure About Market Risk
-------   ---------------------------------------------------------

     The Company  does not have any  significant  exposure to market risk as the
only  market  risk  sensitive  instruments  are its  investments  in  marketable
securities.  At  December  31,  2003,  the  carrying  value of such  investments
(including  those  classified as cash and cash  equivalents)  was  approximately
$3,000,  the fair  value was $3,000  and the face  value was  $3,000.  Since the
Company expects to hold the  investments to maturity,  the maturity value should
be realized.









                                       32
<PAGE>



Item 8.   Financial Statements and Supplementary Data
------    -------------------------------------------


                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors
Coastal Caribbean Oils & Minerals, Ltd.

We have audited the accompanying consolidated balance sheet of Coastal Caribbean
Oils & Minerals, Ltd. (a development stage company) as of December 31, 2002, and
the related consolidated statements of operations,  cash flows, and common stock
and capital in excess of par value for each of the two years in the period ended
December 31, 2002.  These  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Coastal
Caribbean  Oils & Minerals,  Ltd. at December  31,  2002,  and the  consolidated
results  of its  operations  and its cash flows for each of the two years in the
period  ended  December  31,  2002  in  conformity  with  accounting  principles
generally accepted in the United States.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going  concern.  As more fully  described in
Notes  1 and 4 to the  consolidated  financial  statements,  the  Company  has a
working  capital  deficiency,  has incurred  recurring  losses and has a deficit
accumulated during the development stage. In addition,  the Company has been and
continues  to be  involved  in several  legal  proceedings  against the State of
Florida  which  have  limited  the  Company's  ability to  commence  development
activities  on its unproved oil or gas  properties  or obtain  compensation  for
certain  property  rights it believes have been  confiscated.  These  situations
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern. The consolidated financial statements do not include any adjustments to
reflect the possible future effects on the  recoverability and classification of
assets or amounts and  classification  of  liabilities  that may result from the
outcome of these uncertainties.


                                                           /s/ Ernst & Young LLP

Stamford, Connecticut
February 12, 2003


                                       33
<PAGE>


                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Coastal Caribbean Oils & Minerals, Ltd.:

We have audited the accompanying consolidated balance sheet of Coastal Caribbean
Oils & Minerals, Ltd. (a development stage company) as of December 31, 2003, and
the related consolidated  statements of operations,  cash flows and common stock
and capital in excess of par value for the year ended  December 31, 2003 and for
the period from  January 31,  1953  (inception)  to  December  31,  2003.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of Coastal Caribbean
Oils & Minerals, Ltd. as of December 31, 2003, and the results of its operations
and its cash flows for the year ended  December 31, 2003 and for the period from
January 31, 1953 (inception) to December 31, 2003, in conformity with accounting
principles generally accepted in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going  concern.  As more fully  described in
Notes  1 and 4 to the  consolidated  financial  statements,  the  Company  had a
working  capital  deficiency,  has incurred  recurring  losses and has a deficit
accumulated during the development stage. In addition,  the Company has been and
continues  to be  involved  in several  legal  proceedings  against the State of
Florida  which  have  limited  the  Company's  ability to  commence  development
activities  on its unproved oil or gas  properties  or obtain  compensation  for
certain  property  rights it believes have been  confiscated.  These  situations
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern. The consolidated financial statements do not include any adjustments to
reflect the possible future effects on the  recoverability and classification of
assets or amounts and  classifications  or liabilities  that may result from the
outcome of these uncertainties.


                                                     /s/ James Moore & Co., P.L.



March 23, 2004
Gainesville, Florida




                                       34
<PAGE>



<TABLE>
                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                             (A Bermuda Corporation)
                           A Development Stage Company

                           CONSOLIDATED BALANCE SHEETS
                           (Expressed in U.S. dollars)

                                                                                                            December 31,
                                                                                                 ----------------------------------
                                                                                                     2003                  2002
                                                                                                 ----------------------------------
Assets
Current assets:
<S>                                                                                              <C>                   <C>
  Cash and cash equivalents                                                                      $      2,875          $    292,095
  Prepaid expenses and other                                                                           87,947               414,700
                                                                                                 ------------          ------------
          Total current assets                                                                         90,822               706,795

Contingent litigation claim (Note 4)                                                                        -                     -

                                                                                                 ------------          ------------
Total assets                                                                                     $     90,822          $    706,795
                                                                                                 ============          ============

Liabilities and Shareholders'
(Deficit) Equity Current liabilities:
  Accounts payable and accrued liabilities                                                            805,110               915,085
  Amounts due to related parties                                                                    1,053,800               621,618
                                                                                                 ------------          ------------
          Total current liabilities                                                                 1,858,910             1,536,703
                                                                                                 ------------          ------------
Minority interests                                                                                          -                     -

Shareholders' (deficit) equity: Common stock, par value $.12 per share:
    Authorized - 250,000,000 shares
    Outstanding - 46,211,604
    shares, respectively                                                                            5,545,392             5,545,392
  Capital in excess of par value                                                                   32,137,811            32,067,811
                                                                                                 ------------          ------------
                                                                                                   37,683,203            37,613,203
  Deficit accumulated during the development stage                                                (39,451,291)          (38,443,111)
                                                                                                 ------------          ------------
Total shareholders' (deficit) equity                                                               (1,768,088)             (829,908)
                                                                                                 ------------          ------------
Total liabilities and shareholders' (deficit) equity                                             $     90,822          $    706,795
                                                                                                 ============          ============
</TABLE>


                             See accompanying notes.


                                       35
<PAGE>




                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                             (A Bermuda Corporation)
                           A Development Stage Company

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                           (Expressed in U.S. Dollars)

<TABLE>

                                                                                                                         For the
                                                                                                                       period from
                                                                                                                      Jan. 31, 1953
                                                                           Years ended December 31,                    (inception)
                                                           ----------------------------------------------------            to
                                                               2003                2002                2001           Dec. 31, 2003
                                                           ------------        ------------        ------------        ------------


<S>                                                        <C>                 <C>                 <C>                 <C>
Interest and other income                                  $        658        $      7,357        $     78,432        $  3,877,570
                                                           ------------        ------------        ------------        ------------

Expenses:
  Legal fees and costs                                          342,451           1,549,178           1,670,446          16,572,588
  Administrative expenses                                       457,649             662,390             533,579           9,527,279
  Salaries                                                      118,745             151,800             151,800           3,642,973
  Shareholder communications                                     30,746              32,286             105,863           3,948,527
  Write off of unproved properties                               59,247              59,247           4,201,733           5,560,494
  Exploration costs                                                   -                   -                 480             247,465
  Lawsuit judgments                                                   -                   -                   -           1,941,916
  Minority interests                                                  -                   -                   -            (632,974)
  Other                                                               -                   -                   -             364,865
  Contractual services                                                -                   -                   -           2,155,728
                                                           ------------        ------------        ------------        ------------
                                                              1,008,838           2,454,901           6,663,901          43,328,861
                                                           ------------        ------------        ------------        ------------

Net loss                                                   $ (1,008,180)       $ (2,447,544)       $ (6,585,469)
                                                                               ============        ============

Deficit accumulated during the
  development stage                                                                                                    $(39,451,292)
                                                                                                                       ============

Net loss per share based on weighted
average number of shares outstanding
during the period:
    Basic and diluted EPS                                         $(.02)              $(.05)              $(.15)
                                                                 ======               =====               =====

Weighted average number of shares outstanding
(basic and diluted)
                                                             44,734,456          44,734,456          43,468,329
                                                             ==========          ==========          ==========
</TABLE>


                             See accompanying notes.



                                       36
<PAGE>

                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                             (A Bermuda Corporation)
                           A Development Stage Company

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (Expressed in U.S. Dollars)


<TABLE>
                                                                                                                For the period from
                                                                                                                   Jan. 31, 1953
                                                                            Years ended December 31,                (inception)
                                                               ------------------------------------------------           To
                                                                  2003               2002              2001         Dec. 31, 2003
                                                               ------------      ------------      ------------ -------------------


Operating activities:
<S>                                                            <C>               <C>               <C>               <C>
Net loss                                                       $ (1,008,180)     $ (2,447,544)     $ (6,585,469)     $(39,451,292)
Adjustments to reconcile net loss to net cash
  used in operating activities:
    Minority interest                                                     -                 -                 -          (632,974)
    Write off of unproved properties                                 59,247            59,247         4,201,733         5,619,741
    Common stock issued for services                                      -                 -                 -           119,500
    Compensation recognized for stock option grant                        -                 -                 -            75,000
  Net change in:
     Prepaid expenses and other                                     326,752           (52,500)            3,217           (87,948)
     Accrued liabilities                                            322,208         1,178,082           165,445         1,858,912
     Other assets                                                         -            90,391           (62,525)                -
                                                               ------------      ------------      ------------      ------------
Net cash used in operating activities                              (299,973)       (1,172,324)       (2,277,599)      (32,246,888)
                                                               ------------      ------------      ------------      ------------

Investing activities:
  Additions to oil, gas, and mineral properties
     net of assets acquired for common stock and
    reimbursements                                                  (59,247)          (59,247)          (57,051)       (3,740,182)
  Proceeds from relinquishment of surface rights                          -                 -                 -           246,733
  Marketable securities (net)                                             -                 -                 -                 -
  Notes receivable                                                        -            15,000           (15,000)                -
  Purchase of fixed assets                                                -                 -                 -           (61,649)
                                                               ------------      ------------      ------------      ------------
Net cash provided by (used in) investing activities                 (59,247)          (44,247)          (72,051)       (3,555,098)
                                                               ------------      ------------      ------------      ------------


Financing activities:
  Sale of common stock, net of expenses                                   -           899,642                 -        30,380,612
  Shares issued upon exercise of options                                  -                 -                 -           884,249
  Sale of shares by subsidiary                                       70,000                 -                 -           820,000
  Sale of subsidiary shares                                               -                 -                 -         3,720,000
                                                               ------------      ------------      ------------      ------------
Net cash provided by financing activities                            70,000           899,642                 -        35,804,861
                                                               ------------      ------------      ------------      ------------
Net increase (decrease) in cash and cash  equivalents              (289,220)         (316,929)       (2,349,650)            2,875
Cash and cash equivalents at beginning of period                    292,095           609,024         2,958,674                 -
                                                               ------------      ------------      ------------      ------------
Cash and cash equivalents at end of period                     $      2,875      $    292,095      $    609,024      $      2,875
                                                               ============      ============      ============      ============
</TABLE>


                             See accompanying notes.



                                       37
<PAGE>



                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                             (A Bermuda Corporation)
                           A Development Stage Company

                     CONSOLIDATED STATEMENT OF COMMON STOCK
                       AND CAPITAL IN EXCESS OF PAR VALUE
                           (Expressed in U.S. dollars)
      For the period from January 31, 1953 (inception) to December 31, 2003

<TABLE>
                                                                                                                       Capital in
                                                                         Number of                Common                 Excess
                                                                           Shares                 Stock               of Par Value
                                                                         ----------            -----------            ------------
<S>                                                                       <C>                  <C>                    <C>
Shares issued for net assets and unrecovered costs
   at inception                                                           5,790,210            $   579,021            $  1,542,868
Sales of common stock                                                    26,829,486              3,224,014              16,818,844
Shares issued upon exercise of stock options                                510,000                 59,739                 799,760
Market value ($2.375 per share) of shares issued in
  1953 to acquire an investment                                              54,538                  5,454                 124,074
Shares issued in 1953 in exchange for 1/3rd of a 1/60th
  overriding royalty (sold in prior year) in nonproducing
  leases of Coastal Petroleum                                                84,210                  8,421                       -
Market value of shares issued for services rendered
  during the period 1954-1966                                                95,188                  9,673                 109,827
Net transfers to restate the par value of common stock
  outstanding in 1962 and 1970 to $0.12 per share                                 -                117,314                (117,314)
Increase in Company's investment (equity) due to
  capital transactions of Coastal Petroleum in 1976                               -                     -                 117,025
                                                                         ----------            -----------            ------------
Balance at December 31, 1990                                             33,363,632              4,003,636              19,395,084
Sale of subsidiary shares                                                         -                      -                 300,000
                                                                         ----------            -----------            ------------
Balance at December 31, 1991                                             33,363,632              4,003,636              19,695,084
Sale of subsidiary shares                                                         -                      -                 390,000
                                                                         ----------            -----------            ------------
Balance at December 31, 1992                                             33,363,632              4,003,636              20,085,084
Sale of subsidiary shares                                                         -                      -               1,080,000
                                                                         ----------            -----------             -----------
Balance at December 31, 1993                                             33,363,632              4,003,636              21,165,084
Sale of subsidiary shares                                                         -                      -                 630,000
                                                                         ----------            -----------            ------------
Balance at December 31, 1994                                             33,363,632              4,003,636              21,795,084
Sale of subsidiary shares                                                         -                      -                 600,000
                                                                         ----------            -----------            ------------
Balance at December 31, 1995                                             33,363,632              4,003,636              22,395,084
Sale of common stock                                                      6,672,726                800,727               5,555,599
Sale of subsidiary shares                                                         -                      -                 480,000
Exercise of stock options                                                    10,000                  1,200                  12,300
                                                                         ----------            -----------            ------------
Balance at December 31, 1996                                             40,046,358              4,805,563              28,442,983
Sale of subsidiary shares                                                         -                      -                 240,000
Exercise of stock options                                                    10,000                  1,200                  10,050
                                                                         ----------             ----------            ------------
Balance at December 31, 1997,1998 and 1999                               40,056,358              4,806,763              28,693,033
Sale of common stock                                                      3,411,971                409,436               2,729,329
Compensation recognized for stock option grant                                    -                      -                 75,000
                                                                         ----------            -----------             -----------
Balance at December 31, 2000 and 2001                                    43,468,329              5,216,199              31,497,362
Sale of common stock                                                      2,743,275                329,193                 570,449
                                                                         ----------            -----------            ------------
Balance as of December 31, 2002                                          46,211,604              5,545,392              32,067,811
                                                                         ----------            -----------            ------------
Sale of subsidiary shares                                                         -                      -                  70,000
Balance as of December 31, 2003                                          46,211,604            $ 5,545,392            $ 32,137,811
                                                                         ==========            ===========            ============
</TABLE>



                             See accompanying notes.



                                       38
<PAGE>



                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                   Notes to Consolidated Financial Statements
                                December 31, 2003


1.   Summary of significant accounting policies
     ------------------------------------------

Consolidation

     The accompanying  consolidated financial statements include the accounts of
Coastal  Caribbean  Oils  &  Minerals,  Ltd.,  a  Bermuda  corporation  (Coastal
Caribbean) and its majority owned subsidiary, Coastal Petroleum Company (Coastal
Petroleum), referred to collectively as the Company. The Company, which has been
engaged in a single  industry and segment,  is  considered  to be a  development
stage  company since its  exploration  for oil, gas and minerals has not yielded
any significant  revenue or reserves.  All intercompany  transactions  have been
eliminated.

Reclassifications
-----------------

     Certain  amounts  in the 2002  and  2001  financial  statements  have  been
reclassified for comparative purposes to conform to the 2003 presentation.

Cash and Cash Equivalents
-------------------------

     The  Company  considers  all  highly  liquid  short-term  investments  with
maturities  of  three  months  or less at the  date  of  acquisition  to be cash
equivalents.  Cash and cash  equivalents are carried at cost which  approximates
market value. The components of cash and cash equivalents are as follows:

                                                             December 31,
                                                     ---------------------------
                                                       2003                2002
                                                     --------           --------
Cash                                                 $  2,875           $ 92,777
Marketable securities                                       -            199,318
                                                     --------           --------
                                                     $  2,875           $292,095
                                                     ========           ========

Use of Estimates
----------------

     The  preparation of  consolidated  financial  statements in conformity with
accounting   principles   generally  accepted  in  the  United  States  requires
management to make estimates and assumptions that affect the amounts reported in
the financial  statements and accompanying  notes. The outcome of the litigation
and the  ability to develop the  Company's  oil and gas  properties  will have a
significant   effect  on  the  Company's   financial  position  and  results  of
operations. Actual results could differ from those estimates.

Unproved Oil, Gas and Mineral Properties
----------------------------------------

     The Company  follows the full cost method of accounting for its oil and gas
properties.  All costs  associated  with property  acquisition,  exploration and
development activities whether successful or unsuccessful are capitalized.


                                       39
<PAGE>

                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                   Notes to Consolidated Financial Statements
                                December 31, 2003


1.   Summary of significant accounting policies (Cont'd)
     ---------------------------------------------------

     Since the Company's  properties were  undeveloped and  nonproducing and the
subject of litigation,  capitalized costs were not being amortized,  however, as
more fully described in Note 3, these costs were written off in 2001.

     The capitalized  costs are subject to a ceiling test which basically limits
such costs to the aggregate of the estimated  present value  discounted at a 10%
rate of future net revenues from proved reserves,  based on current economic and
operating  conditions,  plus the lower of cost or fair market  value of unproved
properties.

     The Company  assesses  whether its  unproved  properties  are impaired on a
periodic  basis.  This assessment is based upon work completed on the properties
to  date,  the  expiration  date of its  leases  and  technical  data  from  the
properties  and  adjacent  areas.  These  properties  are  subject to  extensive
litigation with the State of Florida.

     During the year 2001, the Company  concluded that its leases had been taken
and its property  interests  were  impaired by the actions taken by the State of
Florida and  therefore,  had recorded an impairment  charge to reflect the write
off of the costs of  unproved  oil,  gas and  minerals  properties.  See Note 4.
Litigation. All costs incurred in 2002 and 2003 in connection with the Company's
Florida leases have been  capitalized and immediately  expensed as an impairment
charge.

Sale of Subsidiary Shares
-------------------------

     All amounts  realized from the sale of Coastal  Petroleum  shares have been
credited to capital in excess of par value.

Loss Per Share
--------------

     Loss per common share is based upon the weighted  average  number of common
and common equivalent shares  outstanding during the period. The Company's basic
and diluted  calculations of EPS are the same because the exercise of options is
not assumed in  calculating  diluted EPS, as the result  would be  anti-dilutive
(the Company has continuing losses).

Financial instruments
---------------------

     The carrying  value for cash and cash  equivalents,  and  accounts  payable
approximates  fair value  based on  anticipated  cash flows and  current  market
conditions.



                                       40
<PAGE>

                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                   Notes to Consolidated Financial Statements
                                December 31, 2003



1.   Summary of significant accounting policies (Cont'd)
     ---------------------------------------------------

Stock Options
-------------

     The Company  adopted the  disclosure  provisions  of Statement of Financial
Accounting  Standards  (SFAS or Statement) No. 148,  "Accounting for Stock-Based
Compensation  --  Transition  and  Disclosure",   which  amends  SFAS  No.  123,
"Accounting  for  Stock-Based  Compensation",  in 2002.  SFAS No.  148  provides
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation, which was originally
provided  under SFAS No. 123. The  Statement  also  improves the  timeliness  of
disclosures  by requiring the  information  to be included in interim as well as
annual financial statements.  The adoption of these disclosure provisions had no
impact on the  Company's  2002  consolidated  results of  operations,  financial
position or cash flows.

     At December  31,  2003,  the Company  maintains  one  stock-based  employee
compensation  plan (see note 6, Stock Option Plan). The Company accounts for the
employee stock  compensation  plan in accordance with the intrinsic  value-based
method prescribed by Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to  Employees."  No stock-based  employee  compensation  expense is
reflected  in net loss as all options  granted  under the plans have an exercise
price equal to the fair market value of the underlying  common stock on the date
of grant.

Going Concern
-------------

     The Company has a working capital deficiency,  has a limited amount of cash
and  cash  equivalents,   has  incurred  recurring  losses  and  has  a  deficit
accumulated  during the  development  stage.  Furthermore,  on January 16, 2001,
Coastal  Petroleum filed a complaint in the Leon County Circuit Court in Florida
against the State of Florida seeking  compensation for the State's taking of its
property  rights to explore for oil and gas within its Lease 224-A.  On November
15, 2002, the Trial Court issued its Final Judgment that the State's denial of a
permit  to drill on  Coastal  Petroleum's  Lease  224-A  did not  constitute  an
unlawful taking of Coastal Petroleum's property. The cost of that litigation has
been substantial and has required the Company to obtain additional capital.






                                       41
<PAGE>

                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                   Notes to Consolidated Financial Statements
                                December 31, 2003



1.   Summary of significant accounting policies (Cont'd)
     ---------------------------------------------------

     Coastal Petroleum Company filed a notice of appeal of the Final Judgment to
the Florida First  District Court of Appeal on November 18, 2002. On December 3,
2003,  the  appellate  court  issued a  unanimous  decision,  without  a written
opinion,  affirming  the  trial  court's  decision.  The  Court  further  denied
Coastal's Petition for Clarification,  Rehearing,  Certification and Request for
written  opinion and the decision  became final on January 9, 2004.  On April 7,
2004,  Coastal  filed a Petition for Writ of  Certiorari  with the United States
Supreme  Court  asking the Court to accept  jurisdiction  to consider the action
taken by the trail court as affirmed by the appellate court.

     At December 31, 2003,  Coastal Caribbean had  approximately  $3,000 of cash
and cash  equivalents  available.  In  addition,  the  Company  has  received  a
commitment from some of its Directors to loan the Company funds which management
believes  should be  sufficient to fund the  Company's  operations  through June
2004,  provided  that payments to the  Company's  litigation  counsel and to the
Company's  salaried  employee are deferred and provided further that payments to
other Company counsel are also deferred.

     Since October 2002,  Coastal Caribbean and Coastal Petroleum have attempted
to raise funds from the other shareholders of Coastal Petroleum and from others.
In March 2003 Coastal  Petroleum sold two shares of its common stock for $25,000
per share to a non-shareholder  of Coastal Petroleum and in October 2003 Coastal
Petroleum  sold two  shares  of its  common  stock for  $10,000  per share to an
existing  shareholder of Coastal Petroleum.  Other than these sales,  Management
has been  unsuccessful  at raising  additional  funds.  These  situations  raise
substantial  doubt about the Company's  ability to continue as a going  concern.
The consolidated  financial statements do not include any adjustments to reflect
the possible future effects on the  recoverability  and classification of assets
or amounts and classification of liabilities that may result from the outcome of
these uncertainties.

2.   Coastal Petroleum Company - Minority Interests
     ----------------------------------------------

     In 1992,  Coastal Caribbean granted Lykes Minerals Corp.  (Lykes), a wholly
owned  subsidiary of Lykes Bros. Inc., an option to acquire 78 shares of Coastal
Petroleum at $40,000 per share.  Lykes  exercised all of its options to purchase
Coastal  Petroleum  shares at a total cost of $3,120,000  and as of December 31,
2003 and 2002, held 26.35% and 26.7% of Coastal Petroleum, respectively.

     The Lykes  agreement  provides  that Lykes is  entitled  to  exchange  each
Coastal  Petroleum  share for  100,000  Coastal  Caribbean  shares,  subject  to
adjustment for dilution and other factors. If fully exercised,  that entitlement
would  leave  Lykes with about 15% of Coastal  Caribbean's  outstanding  shares.
Lykes also has the right to exchange  Coastal  Petroleum  shares for  overriding




                                       42
<PAGE>

                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                   Notes to Consolidated Financial Statements
                                December 31, 2003


2.   Coastal Petroleum Company - Minority Interests (Cont.)
     ------------------------------------------------------

royalty interests in Coastal Petroleum's  properties.  If Lykes were to exchange
its 26.35% interest in Coastal Petroleum for a royalty interest,  its overriding
royalty interest in Coastal Petroleum's working-interest acreage would be 3.3%.

     Coastal Petroleum shares were owned as follows:

                                           December 31,            December 31,
                                              2003                     2002
                                              ----                     ----
                                       Shares         %        Shares        %
                                       ------       -----      ------      -----
Coastal Caribbean                        173        58.45        173       59.30
Lykes                                     78        26.35         78       26.70
Others                                    45        15.20         41       14.00
                                         ---       ------        ---       -----
                                         296        100.0        292       100.0
                                         ===       ======        ===       =====


     Coastal Caribbean has been making loans to Coastal Petroleum,  its majority
owned  subsidiary,  in order for  Coastal  Petroleum  to  continue  the  Florida
Litigation and pay its operating  expenses.  At December 31, 2003, the amount of
these loans  totaled  $21,912,915  and the  accumulated  interest at 6.0% on the
loans totaled $9,232,026 for a total indebtedness of $31,144,941. All such loans
and interest have been  eliminated  in  consolidation,  as Coastal  Caribbean is
required to record 100% of the losses of Coastal  Petroleum because the minority
interests  have been fully  liquidated  and have no further  obligation  to fund
Coastal Petroleum.

3.   Unproved Oil, Gas and Mineral Properties
     ----------------------------------------

     Coastal  Petroleum  holds three  unproved  and  nonproducing  oil,  gas and
mineral leases granted by the Trustees of the Internal  Improvement  Fund of the
State of Florida (Trustees). These leases cover submerged and unsubmerged lands,
principally  along the Florida Gulf Coast,  and certain  inland lakes and rivers
throughout the State.

     The two leases bordering the Gulf Coast have been divided into three areas,
each running the entire length of the  coastline  from  Apalachicola  Bay to the
Naples area.  Coastal Petroleum has certain royalty interests in the inner area,
no interest in the middle area and a 100% working interest in the outside area.

     Coastal Petroleum also has a 100% working interest in Lake Okeechobee,  and
a royalty interest in other areas.  Coastal  Petroleum has agreed not to conduct
exploration,  drilling,  or mining  operations  on said lake,  except with prior
approval of the Trustees.




                                       43
<PAGE>

                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                   Notes to Consolidated Financial Statements
                                December 31, 2003


3.   Unproved Oil, Gas and Mineral Properties (Cont.)
     ------------------------------------------------

     The three  leases have a term of 40 years from  January 6, 1976 and require
the payment of annual lease rentals of totaling $59,247; if oil, gas or minerals
are being produced in  economically  sustainable  quantities at January 6, 2016,
these operations will be allowed to continue until they become  uneconomic.  The
drilling  requirements are governed by Chapter 20680,  Laws of Florida,  Acts of
1941.  Under the 1941 Act, a lessee is  required to drill at least one test well
on lands  leased in each  five year  period  under  the term of the  lease.  The
Company believes that it is current in fulfilling its drilling requirements.

     The working  interest  areas of the three  leases are subject to  royalties
payable to the  Trustees of 12 1/2% on oil and gas,  $.50 per long ton of sulfur
and 10% on other  minerals.  The leases are  subject  to  additional  overriding
royalties which  aggregate  1/16th as to oil, gas and sulfur and 13/600ths as to
other minerals.

     During the year 2001,  the Company  concluded  that its property  interests
were  impaired  by the  actions  taken by the  State of  Florida  and  therefore
recorded an  impairment  charge in the amount of $4,201,733 to reflect the write
off of these  costs.  See Note 4.  Litigation.  Although  these  costs have been
written  off,  the  Company  still has legal  title to the leases and intends to
continue to pay annual lease rentals on the leases.

4.   Litigation
     ----------

Florida Litigation
------------------

     Coastal  Petroleum  has been  involved in various  lawsuits for many years.
Coastal Petroleum's current litigation now involves one basic claim: whether the
State's offshore  drilling policy and its denial of a permit constitute a taking
of Coastal Petroleum's  property.  In addition,  Coastal Caribbean is a party to
another  action in which  Coastal  Caribbean  claims that certain of its royalty
interests have been confiscated by the State.

Drilling Permit Litigation
--------------------------

     In  1992,   Coastal  Petroleum   applied  to  the  Florida   Department  of
Environmental  Protection  (the "DEP") for a permit to drill an exploratory  oil
and gas well off Apalachicola, Florida. The proposed well would be located in an
area included within Lease 224-A.  The DEP  subsequently  denied the application
for issuance of a drilling permit for various reasons and imposed a $1.9 billion
bond.  Coastal  Petroleum  appealed the actions of the DEP to the Florida  First
District Court of Appeal  ("Court of Appeal").  After two decisions by the Court
of Appeal in favor of Coastal Petroleum,  the Florida Supreme Court in July 1996
denied the DEP's petition to review an April 1996 Court of Appeal decision.  The



                                       44
<PAGE>


                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                   Notes to Consolidated Financial Statements
                                December 31, 2003


4.   Litigation (Cont.)
     ------------------

Florida  Supreme  Court had also  refused to review an  earlier  Court of Appeal
decision.

     On August 16, 1996, the DEP notified Coastal Petroleum that it was prepared
to issue the drilling permit subject to Coastal Petroleum publishing a Notice of
Intent to Issue ("Notice") the permit.  The Notice allowed interested parties to
request administrative hearings on the permit.

     On May 28,  1997,  the Oil and Gas  Drilling  Bill  (SB550)  was enacted in
Florida.  The  legislation  requires  that a surety  be  based on the  projected
cleanup costs and possible  natural  resource  damage  associated  with offshore
drilling  as  estimated  by the DEP  and as  established  by the  Administration
Commission (the "Commission")  which is comprised of the Governor of Florida and
the  Cabinet.  Previously,  the  required  surety was  satisfied by a payment of
$4,000 to the Mineral Trust Fund in the first year,  with a maximum  $30,000 per
year and a payment of $1,500 per well for each subsequent  year. On September 9,
1997,  the  State of  Florida  set a new  surety  amount of $4.25  billion  as a
precondition for the issuance of the drilling permit.

     On October 20, 1997, a public  hearing on the permit  application  convened
and concluded on November 6, 1997. The hearing  included the Company's appeal of
the $4.25 billion surety requirement. On April 8, 1998, a Florida Administrative
Law Judge  recommended that Coastal  Petroleum was entitled to a drilling permit
with the requirement of a $225 million  surety.  On May 13, 1998, the Commission
rejected  the  $225  million   surety  and  remanded  the   proceedings  to  the
Administrative Law Judge with instructions to recalculate the surety amount.

     On May 22, 1998, the DEP denied the permit to Coastal Petroleum to drill an
offshore  exploration well near St. George's Island.  Coastal Petroleum appealed
both the denial of the permit by the DEP and the imposition of the surety to the
Court of Appeal.

     On  October  6,  1999,  the  Court  of  Appeal  ruled  that the DEP has the
authority to deny Coastal Petroleum's  drilling permit for its St. George Island
prospect,  provided that Coastal  Petroleum  receives just compensation for what
has been taken.  The State of Florida and certain Florida  environmental  groups
filed on  November  1, 1999 a joint  motion  for  clarification,  rehearing,  or
certification with respect to that decision,  asking the Court of Appeal,  among
other things, to clarify that the question of whether there has been a taking of
Coastal  Petroleum's  leases should be determined in the Circuit Court.  On June
26, 2000, the Court of Appeal denied all of the State's  motions and stated that
the issue of whether  the  denial of a permit  constituted  a  "taking"  was not
before the Court.  The Court  declined to rule on the merits of the taking issue
and stated that the issue was a matter for the Circuit Court.


                                       45
<PAGE>

                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                   Notes to Consolidated Financial Statements
                                December 31, 2003


4.   Litigation (Cont.)
     ------------------

Lease Taking Case (Lease 224-A)
-------------------------------

     On January 16, 2001, Coastal Petroleum filed a complaint in the Leon County
Circuit Court, Florida against the State of Florida seeking compensation for the
State's  taking of its  property  rights to  explore  for oil and gas within its
state Lease 224-A.  The lease  encompasses  more than 400,000 acres off the West
coast of Florida in the Gulf of Mexico.  In its complaint,  Coastal reserved the
right to raise any  federal  claims  that it had a right to bring based upon the
State's  actions,  so that such  claims  could be brought in federal  court,  if
necessary.

     In that case, Coastal Petroleum claimed that the State of Florida has taken
Lease  224-A  by  denying  Coastal  Petroleum  a permit  to  drill  an  offshore
exploration  well near St. George  Island in the Gulf of Mexico.  The history of
the litigation  between Coastal  Petroleum and the State of Florida  relating to
the  denial of the  drilling  permit is set forth  under the  caption  "Drilling
Permit  Litigation."  Coastal Petroleum maintains that the State has effectively
taken  Coastal  Petroleum's  lease  by  depriving  Coastal  Petroleum  of all or
substantially  all  of the  economically  viable  use  of  its  constitutionally
protected property.

     On October 8,  2002,  after a two week trial the trial  court in the taking
litigation  orally  ruled from the bench that the State's  denial of a permit to
drill on Coastal  Petroleum's  Lease 224-A did not constitute an unlawful taking
of Coastal  Petroleum's  property.  On November 15, 2002, the trial court issued
its Final  Judgment  that the  State's  denial  of a permit to drill on  Coastal
Petroleum's  Lease  224-A did not  constitute  an  unlawful  taking  of  Coastal
Petroleum's property.

     Coastal Petroleum Company filed a notice of appeal of the Final Judgment to
the Florida  First  District  Court of Appeal on November 18, 2002 and filed its
initial appeal brief on January 27, 2003. The intervenors  (as described  below)
joined the appeal of the Final  Judgment and appealed the ruling on their motion
to intervene.  After all briefs were  submitted,  oral  arguments  were heard on
November  19,  2003.  On December 3, 2003 the Florida  First  District  Court of
Appeals'  affirmed the trial  court's  Judgment.  In December,  2003 the Company
filed a Motion for  Clarification,  Rehearing,  Certification  and Request for a
Written  Opinion as to the  Court's  per curiam  decision  issued on December 3,
2003.  In January,  2004,  the Court  denied this Motion,  the Court's  decision
affirming the trial court's final judgment  finding no taking of Coastal's State
Drilling Lease 224-A, became final.



                                       46
<PAGE>

                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                   Notes to Consolidated Financial Statements
                                December 31, 2003


4.   Litigation (Cont.)
     ------------------

     On April 7, 2004,  Coastal filed a Petition for Writ of Certiorari with the
United States Supreme Court asking the Court to accept  jurisdiction to consider
the action taken by the trail court as affirmed by the  appellate  court.  After
jurisdictional  briefs are submitted  the Court will decide  whether to exercise
its jurisdiction and if so briefs on the merits will be required.

     On December  13,  2002,  the State filed a motion for an order by the trial
court by which the State  seeks to  recover  $178,315  from  Coastal  Petroleum,
including  expert witness fees,  deposition costs and copying costs. On December
20,  2002,  Coastal  Petroleum  filed  objections  and  responses to the State's
motion,  objecting to the costs and  requesting an evidentiary  hearing.  In the
opinion of Company's  litigation counsel,  the State's motion for fees and costs
is without  merit.  On April 9, 2003,  the State agreed not to pursue its motion
until  after  conclusion  of the appeal in this  case.  An award of costs by the
trial court against Coastal Petroleum could be appealed by either party. Coastal
Petroleum  also would have the right to seek an automatic stay of any cost award
rendered against it pending appeal of the award, by the posting of a bond deemed
sufficient by the trial court.

Ancillary Matters to Lease Taking Case
--------------------------------------

     On February 13, 2001,  certain  holders of  royalties  pertaining  to Lease
224-A filed a Motion to Intervene as Additional  Plaintiffs.  On April 24, 2001,
the Leon County  Circuit  trial  judge  granted  certain  royalty  holders  with
overriding royalties, which aggregate approximately 4% on State Lease 224-A, the
right to intervene on a limited basis in the takings lawsuit.

     Counsel for the appealing  royalty  holders has advised  Coastal  Petroleum
that the royalty holders' position is that their interest is worth substantially
more than 4% of whatever  judgment  may be awarded to Coastal  Petroleum  in the
litigation  and that they intend to make a claim  against any  recovery  Coastal
Petroleum may obtain in the litigation.  Coastal Petroleum  informed the Circuit
Court and counsel for the royalty  holders that Coastal  Petroleum is not making
any claim in the  litigation  on behalf of any interest the royalty  holders may
have.

No Assurances
-------------

     There is no assurance  that Coastal  Petroleum  will be  successful  on the
merits of its claims, which the State of Florida is vigorously defending.  There
is also no assurance that Coastal Petroleum will receive a ruling that its Lease
224-A has been  taken or that if  compensation  is awarded it will be awarded in
the amount sought by Coastal Petroleum.


                                       47
<PAGE>

                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                   Notes to Consolidated Financial Statements
                                December 31, 2003


4.   Litigation (Cont.)
     ------------------

Other Permit Applications
-------------------------

     On February 25, 1997 Coastal Petroleum filed 12 additional applications for
drilling permits.  Coastal Petroleum objected to certain requests for additional
data by the Florida DEP and the  permits  were  denied.  On March 26,  1999,  an
administrative  law  judge  upheld  the  DEP's  requirements  and  denial of the
permits.  The  First  District  Court of Appeal  affirmed  the  decision  of the
administrative law judge on February 29, 2000.

     In order to more fully permit the  Apalachicola  Reef Play,  which includes
the St. George Island  prospect,  on October 29, 1998,  Coastal  Petroleum filed
four  additional  permit  applications  (1310-1313).   The  DEP  also  requested
additional data for these applications.  As of March 18, 2004, Coastal Petroleum
had not yet submitted the requested data.  Although these applications are still
pending,  Coastal  Petroleum  does not  believe  the DEP will ever  grant  these
permits.

Coastal Caribbean Royalty Litigation
------------------------------------

     The offshore areas covered by Coastal Petroleum's original leases (prior to
the 1976  Settlement  Agreement) are subject to certain other royalty  interests
held by third parties,  including Coastal Caribbean.  On April 20, 1994, several
of those third parties,  including Coastal Caribbean,  which has approximately a
12% interest in any recovery,  have  instituted a separate  lawsuit  against the
State of Florida in the 5th Judicial  Circuit in Hernando  County.  That lawsuit
claims that the royalty holders'  interests have been confiscated as a result of
the State's  actions  discussed above and that they are entitled to compensation
for that taking.  The royalty  holders  were not parties to the 1976  Settlement
Agreement,  and the royalty  holders  contend  that the terms of the  Settlement
Agreement do not protect the State from taking claims by those royalty  holders.
The case was subsequently transferred to the 2nd Judicial Circuit in Leon County
and it is still pending before the Circuit Court in  Tallahassee.  The State has
filed a motion for  summary  judgment  but no hearing  date has been set for the
motion.  Discovery  is  proceeding.  Any recovery  made in the royalty  holders'
lawsuit would be shared among the various plaintiffs in that lawsuit,  including
Coastal Caribbean, but not Coastal Petroleum.






                                       48
<PAGE>

                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                   Notes to Consolidated Financial Statements
                                December 31, 2003



4.   Litigation (Cont.)
     ------------------

Lease Taking Case (Lease 224-B)
-------------------------------

     On May 21,  2002,  Coastal  Petroleum  filed a complaint in the Leon County
Circuit Court, Florida against the State of Florida seeking compensation for the
State's  alleged taking of its property rights to explore for oil and gas within
its State Lease 224-B.  The lease  encompasses  more than 400,000  acres off the
West Coast of Florida in the Gulf of Mexico.  On July 22,  2002, a motion by the
State of Florida to dismiss  the case was heard.  The court  denied the  State's
motion to dismiss the case and the case is currently pending and is still in the
discovery stage.

     On March 28, 2003,  the State filed a motion to stay the  proceeding  until
the appeal of Lease  224-A is  completed.  A hearing  before the trial judge was
held on May 1, 2003, at which  Coastal  objected to the stay unless the stay was
conditioned upon the suspension of Coastal's lease obligation.  The judge denied
the motion to stay and discovery is still proceeding.

Counsel
-------

     The Tampa, Florida law firm of Gaylord Merlin Ludovici Diaz & Bain (Gaylord
Merlin) was Coastal  Petroleum's  principal trial counsel in Coastal Petroleum's
inverse  condemnation  claim  against  the State of Florida  in Florida  Circuit
Court.  Mr. Cary Gaylord is the lead attorney for Gaylord  Merlin.  In addition,
the law firm of  Angerer & Angerer  of  Tallahassee,  Florida  assisted  Gaylord
Merlin in the litigation. Robert Angerer, Sr., a member of the firm, was elected
director of Coastal  Caribbean  and Costal  Petroleum  on January 30, 2003 and a
Vice President of Coastal  Caribbean and Coastal Petroleum on February 28, 2003.
Angerer & Angerer is the  principal  counsel  in the  appeal of the Taking  Case
(Lease 224-A) and the principal  trial  counsel in Coastal  Petroleum's  inverse
condemnation claim regarding Lease 224-B.

Statutory Attorneys' Fees
-------------------------

     Chapter 73 of Florida law  provides in eminent  domain  proceedings  (which
would include Coastal  Petroleum's  taking claim) that, in addition to the award
made to the property owner,  the court shall award  attorneys' fees based on the
difference  between the final judgment or settlement and the first written offer
made to the  property  owner by the  State  in  accordance  with  the  following
schedule:



                                       49
<PAGE>

                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                   Notes to Consolidated Financial Statements
                                December 31, 2003


4.   Litigation (Cont.)
     ------------------

     1.   Thirty-three percent of any difference up to $250,000; plus
     2.   Twenty-five  percent of any portion of the difference between $250,000
          and $1 million; plus
     3.   Twenty percent of any portion of the difference exceeding $1 million.

As of December 31, 2003, no such written offer has been made.

Contingency Fees
----------------

     Coastal  Petroleum  has agreed to pay an aggregate  of 8.65% in  contingent
fees based on any net recovery from execution on or  satisfaction of judgment or
from  settlement  of the Florida  litigation to various law firms and current or
former officers of the Company.


     The following contingencies have been granted to related parties:

                              Relationship to Coastal           Net Recovery
          Holder             Petroleum at Date of Grant          Percentage
      ------------------    -----------------------------      ------------
       Benjamin W. Heath        Chairman of the Board              1.25
        Phillip W. Ware               President                    1.25
       Robert J. Angerer         Litigation Counsel                1.50
      Murtha Cullina LLP    Securities Counsel to Coastal
                                      Caribbean                    1.00
        James R. Joyce           Assistant Treasurer                .30
                                                                   ----
             Total                                                 5.30
                                                                   ====

     In  addition,  Coastal  Petroleum  has  agreed  to  pay  Gaylord  Merlin  a
contingent fee in connection with compensation  awarded to Coastal Petroleum for
the taking of Lease 224-A, Lease 224-B and Lease 248 equal to the greater of:

     (a)  approximately 90% of the statutory award of attorneys' fees (discussed
above), less the hourly fees paid to Gaylord Merlin, or

     (b)  ten percent  of the first  $100  million  or  portion  thereof  of the
compensation  received by Coastal  Petroleum from the State as compensation  for
the taking of its property,  plus five percent of such compensation in excess of
$100 million, less

          (i)     the hourly fees paid to Gaylord Merlin and

          (ii)    other costs of the litigation as follows:


                                       50
<PAGE>

                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                   Notes to Consolidated Financial Statements
                                December 31, 2003

4.        Litigation (Cont.)
          ------------------

               (a)  if  compensation  to  Coastal  Petroleum  is less  than  $55
                    million, there shall be no deduction of other costs;

               (b)  if compensation to Coastal  Petroleum is equal to or greater
                    than $55 million,  then for each $5 million  increase  there
                    shall be a  deduction  of $200,000 of other costs up to $100
                    million;

               (c)  for each $5  million  increase  in  compensation  to Coastal
                    Petroleum over $100 million up to total compensation of $160
                    million,  there  shall be a  deduction  of $100,000 of other
                    costs; and

               (d)  for  compensation  to Coastal  Petroleum  over $160 million,
                    there  shall be a deduction  of all costs of the  litigation
                    which  are not  recovered  from the State  (which  shall not
                    include any fees of Mr. Angerer or Mr. Aurell).

 Uncertainty

     Coastal  Petroleum  and/or Coastal  Caribbean may not prevail on any of the
issues set forth above and may not recover compensation for any of their claims.
In  addition,  even if  Coastal  Petroleum  were to prevail on any or all of the
issues to be  decided,  Coastal  Caribbean  or  Coastal  Petroleum  may not have
sufficient  financial resources to survive until such decisions become final. In
the event  that the State of  Florida  were to grant a permit to drill any wells
for which  applications have been filed, the wells drilled may not be successful
and lead to production of any oil or gas in commercial quantities.






                                       51
<PAGE>

                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                   Notes to Consolidated Financial Statements
                                December 31, 2003


5.   Common Stock
     ------------

     The Company's Bye-Law No. 21 provides that any matter to be voted upon must
be approved not only by a majority of the shares voted at such meeting, but also
by a majority  in number of the  shareholders  present in person or by proxy and
entitled to vote thereon.

     The Company  has been  financing  its  operations  primarily  from sales of
common stock and sales of shares of Coastal Petroleum (See Note 2).

     On July 31, 2002,  the Company  concluded  the sale of 2,743,000  shares at
$.50 per share and realized gross proceeds of approximately $1,372,000 ($900,000
after  expenses of the  offering of $90,391  incurred  during 2001 and  $381,600
during 2002 for an aggregate of approximately $472,000).

     On March 10, 2003, the Company  concluded the sale of two shares of Coastal
Petroleum  at a price of $25,000  per  share.  On  October 7 and 28,  2003,  the
Company  concluded  the sale of two  shares of Coastal  Petroleum  at a price of
$10,000 per share.  The  Company  realized  net  proceeds of $70,000 in 2003 for
these sales.










                                       52
<PAGE>

                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                   Notes to Consolidated Financial Statements
                                December 31, 2003

5.   Common Stock (Cont.)
     --------------------

The following represents shares issued upon sales of common stock:

                          Number                  Common      Capital in Excess
     Year              of Shares                   Stock           of Par Value
     ----              ---------                   -----           ------------
     1953                300,000              $   30,000            $   654,000
     1954                 53,000                   5,300                114,265
     1955                 67,000                   6,700                137,937
     1956                 77,100                   7,710                139,548
     1957                 95,400                   9,540                152,492
     1958                180,884                  18,088                207,135
     1959                123,011                  12,301                160,751
     1960                134,300                  13,430                131,431
     1961                127,500                  12,750                 94,077
     1962                  9,900                     990                  8,036
     1963                168,200                  23,548                 12,041
     1964                331,800                  46,452                 45,044
     1965                435,200                  60,928                442,391
     1966                187,000                  26,180                194,187
     1967                193,954                  27,153                249,608
     1968                 67,500                   9,450                127,468
     1969                  8,200                   1,148                 13,532
     1970                274,600                  32,952                117,154
     1971                299,000                  35,880                 99,202
     1972                462,600                  55,512                126,185
     1973                619,800                  74,376                251,202
     1974                398,300                  47,796                 60,007
     1975                      -                       -                (52,618)
     1976                      -                       -                 (8,200)
     1977                850,000                 102,000              1,682,706
     1978                 90,797                  10,896                158,343
     1979              1,065,943                 127,914              4,124,063
     1980                179,831                  21,580                826,763
     1981                 30,600                   3,672                159,360
     1983              5,318,862                 638,263              1,814,642
     1985                      -                       -                (36,220)
     1986              6,228,143                 747,378              2,178,471
     1987              4,152,095                 498,251              2,407,522
     1990              4,298,966                 515,876                 26,319
     1996              6,672,726                 800,727              5,555,599
     2000              3,411,971                 409,436              2,729,329
     2002              2,743,275                 329,193                570,449
                       ---------                 -------                -------
                      39,657,458              $4,763,370            $25,674,221
                      ==========              ==========            ===========

The following represents shares issued upon exercise of stock options:

                          Number                  Common      Capital in Excess
     Year             of  Shares                   Stock           of Par Value
     ----             ----------                   -----           ------------
     1955                 73,000                 $ 7,300               $175,200
     1978                  7,000                     840                  6,160
     1979                213,570                  25,628                265,619
     1980                 76,830                   9,219                125,233
     1981                139,600                  16,752                227,548
     1996                 10,000                   1,200                 12,300
     1997                 10,000                   1,200                 10,050
                         -------                 -------               --------
                         530,000                 $62,139               $822,110
                         =======                 =======               ========

     Coastal  Caribbean  has  reserved  7,800,000  shares which may be issued in
exchange for Coastal Petroleum shares, as described in Note 2.



                                       53
<PAGE>

                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                   Notes to Consolidated Financial Statements
                                December 31, 2003

6.   Stock Option Plan
     -----------------

     The Company has elected to follow  Accounting  Principles Board Opinion No.
25,  "Accounting  for  Stock  Issued  to  Employees"  (APB No.  25) and  related
Interpretations in accounting for its stock options because the alternative fair
value  accounting  provided under FASB Statement No. 123,  "Accounting for Stock
Based  Compensation,"  requires  use of option  valuation  models  that were not
developed  for use in  valuing  stock  options.  Under APB No. 25,  because  the
exercise  price of the Company's  stock  options  equals the market price of the
underlying stock on the date of grant, no compensation expense is recognized.

     During 1995,  the Company  adopted a Stock Option Plan  covering  1,000,000
shares of the  Company's  common stock.  On March 24, 2000,  ten year options to
purchase 700,000 shares of the Company's common stock were granted.  A charge to
legal  expense in the amount of $75,000 for the  issuance of 100,000  options to
legal  counsel was recorded.  The charge was  calculated  using a  Black-Scholes
option-pricing  model with the same assumptions as discussed below.  Options are
normally  immediately  vested and  exercisable.  The following table  summarizes
stock option activity:

<TABLE>
Options outstanding                                              Number of Shares          Exercise Price ($)
-------------------                                              ----------------          ------------------
<S>                                                                  <C>                       <C>  <C>
Outstanding and exercisable at December 31, 1999                     527,000                   1.13-2.625
     Expired                                                        (302,000)                     1.13
     Granted                                                         700,000                       .91
                                                                     -------
Outstanding and exercisable at December 31, 2000,
2001, and 2002                                                       925,000                   .91 -2.625
     Expired                                                        (225,000)                  1.13-2.625
                                                                    ---------
Outstanding and exercisable at December 31, 2003                     700,000                       .91
                                                                     =======
</TABLE>


Available for grant at December 31, 2003                              75,000
----------------------------------------                              ======

Summary of Options Outstanding at December 31, 2003
---------------------------------------------------

Year Granted     Number of Shares     Expiration Date      Exercise Prices ($)
------------     ----------------     ---------------      -------------------

Granted 2000          700,000          Mar. 22, 2010             .91


     Pro forma  information  regarding  net  income  and  earnings  per share is
required by FASB  Statement  No. 123, and has been  determined as if the Company
had  accounted  for its  stock  options  under  the fair  value  method  of that
Statement.  The fair value for these  options was estimated at the date of grant
using a Black-Scholes option-pricing model.

     Option valuation models require the input of highly subjective  assumptions
including  the expected  stock price  volatility.  The  assumptions  used in the
valuation model for 2000 were: risk free interest rate - 6.66%,  expected life -
10 years, expected volatility - .741 and expected dividend - 0.

                                       54
<PAGE>

                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                   Notes to Consolidated Financial Statements
                                December 31, 2003


6.   Stock Option Plan (Cont.)
     -------------------------

     Because the  Company's  stock  options have  characteristics  significantly
different from those of traded  options,  and because  changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion,  the  existing  models do not  necessarily  provide a  reliable  single
measure of the fair value of its stock options.

7.   Income taxes
     ------------

     Bermuda  currently  imposes no taxes on corporate  income or capital  gains
outside of Bermuda. The Company's  subsidiary,  Coastal Petroleum,  has U.S. net
operating loss carry  forwards for federal and state income tax purposes,  which
may be used to reduce its taxable  income,  if any,  during  future  years which
aggregated  approximately  $11,400,000  at  December  31, 2003  ($12,106,000  at
December  31,  2002) and expire in varying  amounts  from 2004  through  2023 as
follows: $647,000 in 2004, $550,000 in 2005, $418,000 in 2006, $549,000 in 2007,
$480,000  in 2009,  $571,000  in 2010,  $955,000  in 2011,  $1,281,000  in 2012,
$757,000  in 2018,  $622,000  in 2019,  $749,000  in 2020,  $1,884,000  in 2021,
$1,693,000 in 2022, and $229,000 in 2023. For financial  reporting  purposes,  a
valuation  allowance  has been  recognized  to offset  the  deferred  tax assets
relating  to those  carry  forwards.  Significant  components  of the  Company's
deferred tax assets were as follows:

                                                      2003              2002
                                                   -----------      -----------
Net operating losses                               $ 4,284,000      $ 4,557,000
Deferred intercompany interest deduction             3,474,000        2,794,000
Accruals to related parties                            123,000                0
Write off of unproved properties                     1,831,000        1,831,000
                                                   -----------      -----------
Total deferred tax assets                            9,712,000        9,182,000
Valuation allowance                                 (9,712,000)      (9,182,000)
                                                   -----------      -----------
Net deferred tax assets                            $         -      $         -
                                                   ===========      ===========

8.   Related parties
     ---------------

     Legal Services

     The Company was billed $288,000,  in fees by Angerer & Angerer during 2003,
2002, and 2001. Robert Angerer,  Sr. was elected a director of Coastal Caribbean
and of Coastal  Petroleum  on January 30, 2003 and a Vice  President  of Coastal
Caribbean and Coastal Petroleum on February 28, 2003. At December 31, 2003, fees
of $126,000, $268,000 and $315,000 remain unpaid to G&OD, Murtha Cullina LLP and
Angerer & Angerer, respectively.


                                       55
<PAGE>

                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                   Notes to Consolidated Financial Statements
                                December 31, 2003


8.   Related parties (Cont.)
     -----------------------

     The Company was billed  approximately  $43,500,  $232,000,  and $105,000 in
fees by the law  firm of  Murtha  Cullina  LLP  during  2003,  2002,  and  2001,
respectively.  Mr.  Timothy L. Largay,  a partner of the firm of Murtha  Cullina
LLP,  was a director  and Vice  President  of the Company  from January 15, 2001
until his resignation on October 7, 2002.

     Accounting & Administrative Services

     G&O'D  INC  provided   accounting  and  administrative   services,   office
facilities and support staff to the Company until  December  2002.  G&O'D INC is
owned by Mr. James R. Joyce,  who was the  Treasurer  and  Assistant  Secretary,
until his retirement in December 2002.  During 2002 and 2001,  G&O'D billed fees
of $178,000 and  $136,000,  respectively.  Subsequent  to this time,  Mr. Daniel
Sharp provided accounting and administrative  services to the Company until June
24, 2003.  Effective  June 24, 2003,  Mr. Daniel W. Sharp resigned as Treasurer,
Chief Financial Officer, Chief Accounting Officer and Assistant Secretary of the
Company.  Kenneth Michael  Cornell of Cornell & Associates,  Inc. has become the
Acting Chief  Financial  Officer of the Company,  effective  June 24, 2003 until
present.  During  2003 Mr.  Sharp and Mr.  Cornell  billed  fees of $34,000  and
$16,000, respectively.

     The Company had the following balances due at December 31:

                                      2003            2002
                                    ---------        -------

G&O'D                             $   129,240        $ 127,077
Murtha Cullina                        268,244          220,337
Angerer & Angerer                     315,029          112,839
Other                                 341,287          161,365
                                  -----------        ---------
Due to Related Parties            $ 1,053,800        $ 621,618
                                  ===========        =========







                                       56
<PAGE>

                     COASTAL CARIBBEAN OILS & MINERALS, LTD.
                   Notes to Consolidated Financial Statements
                                December 31, 2003



9.   Selected quarterly financial data (unaudited)
     ---------------------------------------------

     The following is a summary (in thousands,  except for per share amounts) of
the quarterly  results of operations  for the years ended  December 31, 2003 and
2002:

<TABLE>
2003                                             QTR 1       QTR 2      QTR 3        QTR 4
----                                             -----       -----      -----        -----
                                                  ($)         ($)        ($)          ($)

<S>                                               <C>         <C>        <C>          <C>
Total revenues                                       -           -          -            -
Expenses                                          (329)       (217)      (265)        (197)
                                                ------      ------     ------       ------
Net loss                                          (329)       (217)      (265)        (197)
                                                ======      ======     ======       ======
Per share (basic & diluted)                      (.005)      (.005)     (.005)       (.005)
                                                ======      ======     ======       ======

Weighted average number of shares
 outstanding                                    46,212      46,212     46,212       46,212
                                                ======      ======     ======       ======


2002                                             QTR 1       QTR 2      QTR 3        QTR 4
----                                             -----       -----      -----        -----
                                                  ($)         ($)        ($)          ($)

Total revenues                                       4           1          2            1
Expenses                                          (557)       (607)      (860)        (430)
                                                ------      ------     ------       ------
Net loss                                          (553)       (606)      (858)        (429)
                                                ======      ======     ======       ======
Per share (basic & diluted)                       (.01)       (.01)      (.02)        (.01)
                                                ======      ======     ======       ======
Weighted average number of shares
 outstanding                                    43,468      43,468     45,525       46,212
                                                ======      ======     ======       ======
</TABLE>







                                       57
<PAGE>


Item 9.  Changes in and Disagreements with Accountants on
-------  ------------------------------------------------
         Accounting and Financial Disclosure
         -----------------------------------

Previous Independent Accountants

     On May 28,  2003,  Ernst & Young LLP ("Ernst & Young")  resigned as Coastal
Caribbean  Oils  &  Minerals,   Ltd.'s  (the   "Company")   independent   public
accountants.  Ernst & Young's decision to resign was not recommended or approved
by the Company's Board of Directors or any committee thereof.

     Ernst & Young's reports on the Company's  consolidated financial statements
for each of the Company's  fiscal years ended December 31, 2002 and December 31,
2001 did not contain an adverse  opinion or disclaimer of opinion,  and were not
qualified  or  modified  as to audit  scope or  accounting  principles,  but did
contain an  explanatory  paragraph  for an  uncertainty  regarding the Company's
ability to continue as a going concern.

     During the fiscal  years ended  December 31, 2002 and December 31, 2001 and
through  May 28,  2003,  there were no  disagreements  with Ernst & Young on any
matter of accounting principles or practices, financial statement disclosure, or
auditing  scope  or  procedure  which,  if  not  resolved  to  Ernst  &  Young's
satisfaction,  would have caused Ernst & Young to make  reference to the subject
matter in connection with their report on the Company's  consolidated  financial
statements  for such years;  and there were no  reportable  events as defined in
Item 304(a)(1)(v) of the Regulation S-K.

     The  Company   provided  Ernst  &  Young  with  a  copy  of  the  foregoing
disclosures.

New Independent Accountants

     In June, 2003 the Company retained James Moore & Company as its independent
public accountants.


Item 9A.   Controls and Procedures
--------   -----------------------

     Phillip W. Ware, the principal  executive officer,  and Kenneth M. Cornell,
the  principal  financial  officer,  have  evaluated  the  Company's  disclosure
controls and  procedures  (as defined in Rules  13a-14(c) and 15d-14(c)  adopted
under the Securities Act of 1934) within the ninety (90) day period prior to the
date of this report and have concluded:

     1. That the Company's  disclosure  controls and  procedures  are adequately
     designed  to ensure that  material  information  relating  to the  Company,
     including  its  consolidated  subsidiary,  is  timely  made  known  to such
     officers  by others  within the Company  and its  subsidiary,  particularly
     during the period in which this annual report is being prepared; and

     2 That there were no significant changes in the Company's internal controls
     or  in  other  factors  that  could  significantly  affect  these  controls
     subsequent to the date of our evaluation,  including any corrective actions
     with regard to significant deficiencies and material weaknesses.




                                       58
<PAGE>

                                    PART III
                                    --------

Item 10.   Directors and Executive Officers of the Company
--------   -----------------------------------------------

     Directors
     ---------

     As of December 31, 2003, the board of directors included five members,  two
     of whom,  Messrs.  Heath and Ware,  also serve as executive  officers.  The
     board is divided into two classes, with each class serving a term of office
     of  three  years or  until  such  time as  their  successors  are  elected,
     qualified,  and  assume  office.  In as much as no  annual  meeting  of the
     shareholders has been held since 2001, no directors have been elected since
     that time.

<TABLE>
    Name                      Position                  Biographical Information
    ----                      --------                  ------------------------

Class 2002

<S>                       <C>                  <C>
Robert J. Angerer            Director          Mr.  Robert J.  Angerer,  Sr. was appointed as a director of
                          Vice President       Coastal  Caribbean and Coastal Petroleum on January 30, 2003
                                               to  fill a  vacancy  left  by  the  retirement  of  Benjamin
                                               Heath.  He is a  principal  in the  law  firm of  Angerer  &
                                               Angerer,  Tallahassee,   Florida.  He  has  been  litigation
                                               counsel  to  Coastal  Petroleum  for more  than  twenty-five
                                               years. Age fifty-seven

Phillip W. Ware              Director          Mr. Ware, a geologist,  has been President and a director of
                             President         Coastal  Petroleum  since  1985.  Mr.  Ware has also  been a
                             Treasurer         director of Coastal Caribbean since 1985. Age fifty-one.

Class 2003

Graham B. Collis             Director          Mr. Collis,  a director since 1998, has been a member of the
                             Secretary         law firm of Conyers Dill & Pearman,  Hamilton,  Bermuda, our
                          Audit Committee      Bermuda counsel since 1995.  Age forty-two.

John D. Monroe               Director          Mr.  Monroe  is  a  real  estate  broker  and  was  formerly
                          Audit Committee      President of a real estate  brokerage and  development  firm
                                               in Naples,  Florida.  Mr. Monroe,  a director since 1981, is
                                               also  a  director  of  our  subsidiary,  Coastal  Petroleum.
                                               Age seventy-six.
</TABLE>








                                       59
<PAGE>



     Executive Officers
     ------------------

     Philip W. Ware has been  President of Coastal  Petroleum and Vice President
of Coastal  Caribbean for many years and became  President of Coastal  Caribbean
effective  March 1, 2003,  and Robert J.  Angerer,  became a director of Coastal
Caribbean  on  January  30,  2003 and Vice  President  of Coastal  Caribbean  on
February  27,  2003.  Effective  June 24,  2003,  Daniel W.  Sharp  resigned  as
Treasurer,  Chief  Financial  Officer,  Chief  Accounting  Officer and Assistant
Secretary of the Company. Kenneth Michael Cornell of Cornell & Associates,  Inc.
has become the Chief Financial Officer and Principal  Accounting  Officer of the
Company,  effective June 24, 2003. Mr.  Cornell,  age 35, is a Certified  Public
Accountant  who has  served  businesses  in  various  financial  and  accounting
capacities during the past seven years.

     All of the officers of Coastal  Caribbean are elected annually by the board
and report directly to it.

     Only Mr. Ware received direct  compensation  for his services as an officer
of Coastal Caribbean or Coastal  Petroleum.  $69,000 of Mr. Ware's  compensation
for his services  has been  deferred  during 2003.  Mr. Ware devotes 100% of his
professional  time to the business and affairs of Coastal  Caribbean and Coastal
Petroleum.  The other  executive  officers  devote a small  percentage  of their
professional time as officers on behalf of the companies.

     The business  experience  described for each director or executive  officer
above covers the past five years.

     We are not aware of any arrangements or  understandings  between any of the
individuals  named  above and any other  person by which any of the  individuals
named above was  selected as a director  and/or  executive  officer.  We are not
aware of any family  relationship  among the officers  and  directors of Coastal
Caribbean or its subsidiary.

Compliance with Section 16(a) of the Securities Exchange Act of 1934
--------------------------------------------------------------------

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers,  directors and persons who beneficially own more than 10% of
the Company's  Common Stock to file initial reports of beneficial  ownership and
reports of changes in  beneficial  ownership  with the  Securities  and Exchange
Commission  (the "SEC").  Such persons are  required by the SEC  regulations  to
furnish  the  Company  with  copies of all  Section  16(a)  forms  filed by such
persons.  Based  solely  on its  copies  of forms  received  by it,  or  written
representations  from certain  reporting  persons that no Form 5's were required
for those persons,  the Company  believes that during the just completed  fiscal
year, its executive officers,  directors, and greater than 10% beneficial owners
compiled with all applicable filing requirements.



                                       60
<PAGE>




Item 11.   Executive Compensation
--------   ----------------------

         The following table sets forth certain summary information concerning
the compensation of the Company's two most highly-paid executive officers (the
"Named Executive Officers"). No other executive officer earned compensation in
excess of $100,000 during the year 2003.

<TABLE>
--------------------------------------------------------------------------------------------------------------------------
                                             Summary Compensation Table
--------------------------------------------------------------------------------------------------------------------------
                                               Annual Compensation             Long Term
                                               -------------------            Compensation
                                                                                 Award                    All Other
               Name and                                                    Securities Underlying        Compensation ($)
          Principal Position                Year         Salary(1) ($)       Options/SARs (#)

--------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>              <C>
Benjamin W. Heath, President                2003             6,666                 -                          -
and Chief Executive Officer                 2002            40,000                 -                      18,075 (2)
                                            2001            40,000              100,000                   15,600 (2)
--------------------------------------------------------------------------------------------------------------------------
Phillip W. Ware, Vice                       2003            92,000                 -                          -
President                                   2002            92,000              100,000                   13,800 (3)
                                            2001            92,000                                        13,800 (3)
--------------------------------------------------------------------------------------------------------------------------
<FN>
(1)  Mr. Heath was only paid $3,333 of his salary during 2002, and none in 2003.
     Mr. Ware was only paid $23,000 of his salary during 2003.

(2)  Reimbursement  for  office  expenses  $12,075  (of which  $10,025  has been
     deferred),  $12,075 in 2001 and $9,600 in 2000,  and  payments to a SEP-IRA
     pension  plan  $6,000 in 2002 (all of which has been  deferred),  $6,000 in
     2001 and 2000.

(3)  Payment to SEP-IRA pension plan (all of which has been deferred in 2002).
</FN>
</TABLE>

     Mr.  Sharp was paid an hourly fee for his  services  to the Company and was
paid $34,000 in fees during 2003.

     Mr.  Cornell is paid an hourly fee for his  services to the Company and was
paid $16,000 in fees during 2003.

Compensation of Directors

     All of our directors  except for directors who are also executive  officers
are entitled to receive annual directors' fees in the amount of $22,500. For the
year 2003, all director fees have been deferred.


                                       61
<PAGE>

Stock Options

     No Stock Options were granted  during the year ended December 31, 2003. The
following table provides information about unexercised stock options held by the
Named Executive Officers at December 31, 2002:

<TABLE>
-----------------------------------------------------------------------------------------------------------------------
                            Aggregated Option/SAR Exercises in 2003 and December 31, 2003
                                                  Option/SAR Values
-----------------------------------------------------------------------------------------------------------------------
                           Shares                          Number of Securities             Value of Unexercised
                          Acquired         Value          Underlying Unexercised                In-The-Money
                        On Exercise    Realized ($)          Options/SARs (#)                   Options/SARs
                            (#)                            at December 31, 2003             at December 31, 2003
-----------------------------------------------------------------------------------------------------------------------
         Name                                           Exercisable    Unexercisable    Exercisable    Unexercisable
-----------------------------------------------------------------------------------------------------------------------

<S>                          <C>             <C>          <C>                                <C>
Benjamin W. Heath           -0-             -0-           100,000            -              -0-              -
Benjamin W. Heath           -0-             -0-            45,000            -              -0-              -
-----------------------------------------------------------------------------------------------------------------------

Phillip W. Ware             -0-             -0-           100,000            -              -0-              -
Phillip W. Ware             -0-             -0-            72,000            -              -0-              -
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

The Company has not adjusted or amended the exercise  price of any stock options
during the year end December 31, 2003.

Compensation Committee Interlocks and Insider Participation
-----------------------------------------------------------

     The entire  board of  directors  constitutes  the  compensation  committee.
Phillip W. Ware is a director  and  President of Coastal  Caribbean  and Coastal
Petroleum.

















                                       62
<PAGE>




Item 12.   Security Ownership of Certain Beneficial Owners and Management
--------   --------------------------------------------------------------

Security Ownership of Certain Beneficial Owners

     The following table provides  information as to the number of shares of our
stock owned  beneficially at December 31, 2003 by each person who is known to be
the  beneficial  owner of more than 5% of the  outstanding  shares of our common
stock.

<TABLE>
                                             Amount and Nature of
                                             Beneficial Ownership
                                     ------------------------------------
     Name and Address of             Shares Held           Shares Subject
     Beneficial Owner                 Directly                to Option     Percent of Class
     ----------------                 --------                ---------     ----------------

<S>                                       <C>                <C>                  <C>
Lykes Minerals Corp.                      -                  7,800,000*           14.4**
111 East Madison Street
P.O. Box 1690 Tampa, FL 33601

----------
<FN>

*    Lykes  Minerals  Corp.  has  purchased  a total  of 78  shares  of  Coastal
     Petroleum which are convertible into 7,800,000 of our shares.

**   Assumes all outstanding options held by Lykes Mineral Corp are exercised to
     acquire our shares.
</FN>
</TABLE>

As of February 1, 2003, Mr. Robert J. Angerer,  Sr. owned 2,207,487  shares , or
4.77%,  of our common  stock and his son,  Mr.  Robert J.  Angerer,  Jr.,  owned
2,206,914  shares,  or 4.76%, of our common stock.  Mr. Angerer,  Sr.  disclaims
beneficial ownership of any shares owned by his son.

Security Ownership of Management

The  following  table sets forth  information  as to the number of shares of the
     Company's  common  stock  owned  beneficially  at  March  18,  2004 by each
     director of the Company and by all directors  and  executive  officers as a
     group:


<TABLE>
                                                      Amount and Nature of Beneficial
                                                      -------------------------------
                                                               Ownership
                                         ----------------------------------------------------
                                           Shares Held Directly
                                                  or                               Percent of
Name of Individual or Group                   Indirectly                Options      Class
---------------------------                   ----------                -------      -----

<S>                                              <C>                    <C>            <C>
Graham B. Collis                                 85,000 (1)             112,000        *
John D. Monroe                                        0                 136,000        *
Phillip W. Ware                                   3,791                 172,000        *
Kenneth M. Cornell                                    0                       0        *
Robert J. Angerer, Sr.                        2,207,487                       0       4.77
                                              ---------                 -------
Directors and executive officers
  as a group (a total of 5 persons)           2,296,278                 689,000       4.97%
                                              ---------                 -------
<FN>
----------------------
*        Less than 1%.

(1)  Director of Lane Enterprises  (Bermuda) Limited,  a Bermuda company,  which
     also owns 27,758 shares.
</FN>
</TABLE>



                                       63
<PAGE>



                      EQUITY COMPENSATION PLAN INFORMATION

     The following table provides  information  about the Company's common stock
that may be issued upon the exercise of options and rights  under the  Company's
1995 Stock Option Plan as of December 31, 2003.

<TABLE>
--------------------------------------------------------------------------------------------------------------------
                                Number of Securities to       Weighted average        Number of securities remaining
                                be issued upon exercise       exercise price of        available for issuance under
                                of outstanding options,     outstanding options,        equity compensation plans
                                  warrants and rights        warrants and rights     (excluding securities reflected
                                        (a) (#)                    (b) ($)                    in column (a))
                                                                                                 (c) (#)
       Plan Category
--------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                        <C>                           <C>
Equity compensation plans
approved by security holders               0                          0                             0
--------------------------------------------------------------------------------------------------------------------
Equity compensation plans
not approved by security
holders (1)                             700,000                     $1.33                         75,000
--------------------------------------------------------------------------------------------------------------------
                      Total:            700,000                     $1.33                         75,000
--------------------------------------------------------------------------------------------------------------------
<FN>
(1) 1995 Stock Option Plan.
</FN>
</TABLE>

     The Company's  1995 Stock Option Plan was adopted by the Board of Directors
of the Company in March 1995.  1,000,000  shares of the  Company's  common stock
were authorized for issuance under the terms of the plan. Options under the plan
may be granted only to directors,  officers,  key employees of, and  consultants
and consulting  firms to, (i) the Company,  (ii) subsidiary  corporations of the
Company from time to time and any business entity in which the Company from time
to time has a substantial interest, who, in the sole opinion of the Committee of
the Board  administering  the Plan, are  responsible  for the management  and/or
growth of all or part of the business of the Company. The exercise price of each
option to be granted under the plan shall not be less than the fair market value
of the stock subject to the option on the date of grant of the option.





                                       64
<PAGE>


Item 13.   Certain Relationships and Related Transactions
--------   ----------------------------------------------

     Angerer & Angerer
     -----------------

     The  law  firm  of  Angerer  &  Angerer,  Tallahassee,  Florida,  has  been
litigation  counsel to Coastal  Petroleum for more than  twenty-five  years. Mr.
Robert J. Angerer,  Sr., a member of the firm, was elected a director of Coastal
Caribbean and of Coastal  Petroleum on January 30, 2003, and a Vice President of
Coastal  Caribbean  and Coastal  Petroleum on February  28,  2003.  During 2003,
Angerer & Angerer billed Coastal Petroleum  $288,000 for legal fees. At December
31, 2003, fees owed by Coastal Petroleum to Angerer & Angerer of $306,000 remain
unpaid.

Royalty Interests

     The State of Florida oil, gas and mineral leases held by Coastal  Petroleum
on  approximately  3,700,000  acres of submerged  lands along the Gulf Coast and
certain  inland  lakes and rivers are  subject to certain  overriding  royalties
aggregating  1/16th as to oil,  gas and  sulphur,  and  13/600ths as to minerals
other than oil, gas and sulphur. Of the overriding  royalties as to oil, gas and
sulphur,  a  1/90th  overriding  royalty,  and of the  overriding  royalties  on
minerals other than oil, gas and sulphur, a 1/60th overriding  royalty,  is held
by Johnson & Company,  a Connecticut  partnership  which is used as a nominee by
the members of the family of the late William F. Buckley.  A trust, in which Mr.
Heath has a 54.4% beneficial interest, has a beneficial interest in such royalty
interest  held by Johnson &  Company.  No  payments  have been made to Johnson &
Company (or to the  beneficial  owners of such royalty  interests)  in more than
forty years.

     In 1990,  Coastal  Petroleum granted to the following persons the following
percentages of any net recovery from execution on or satisfaction of judgment or
from settlement of the lawsuit against the State of Florida as follows:

                               Percent
                               of net         Coastal Petroleum
              Name             recovery            Position
       ------------------      --------       -----------------
       Benjamin W. Heath       1.25           Chairman of Board*
       Phillip W. Ware         1.25           President
       James R. Joyce          0.30           Treasurer**

(*)  Mr. Heath retired on February 28, 2003.
(**) Mr. Joyce retired in December 2002.





                                       65
<PAGE>


Item 14.   Principal Accounting Fees and Service
--------   -------------------------------------

     James Moore & Co., P.L.  audited the  Company's  financial  statements  for
2003. Ernst & Young LLP audited the Company's financial statements for 2002.

Fees related to services  performed by James Moore & Co., P.L. and Ernst & Young
LLP in 2003 and 2002 were as follows:

                                       2003             2002
                                       ----             ----
Audit Fees (1)                     $ 17,500         $ 142,250
Audit-Related Fees                      -0-               -0-
Tax Fees (2)                            750               -0-
All Other Fees                          -0-               -0-
                                   --------         ---------
Total                              $ 18,250         $ 142,250
                                   ========         =========

(1)  Audit fees represent fees for professional  services provided in connection
     with  the  audit  of our  financial  statements,  review  of our  quarterly
     financial statements,  and for professional services provided in connection
     with the filing of the Company's S-1. The Audit  Committee must  preapprove
     audit related and non-audit  services not prohibited by law to be performed
     by the Company's independent auditors.  The Audit Committee for the Company
     is made up of John D.  Monroe and  Graham B.  Collis.  The Audit  Committee
     preapproved all audit related and non-audit services in 2003 and 2002.
(2)  Tax fees  principally  included  tax advice,  tax  planning  and tax return
     preparation.






                                       66
<PAGE>


                                     PART IV

Item 15.   Exhibits, Financial Statement Schedules and Reports on Form 8-K
--------   ---------------------------------------------------------------

      (a)  (1)   Financial Statements.
                 --------------------

                 The financial statements listed below and included under Item 8
above are filed as part of this report.

                                                                            Page
                                                                            ----

Reports of Independent Auditors                                               33

Consolidated balance sheets at December 31, 2003 and 2002                     35

Consolidated statements of operations for each of the three years in the
period ended December 31, 2003 and for the period from January 31, 1953
(inception) to December 31, 2003.                                             36

Consolidated statements of cash flows for each of the three years in the
period ended December 31, 2003 and for the period from January 31, 1953
(inception) to December 31, 2003.                                             37

Consolidated statement of common stock and capital in excess of par value
for the period from January 31, 1953 (inception) to December 31, 2003.        38

Notes to consolidated financial statements.                                39-57


           (2)   Financial Statement Schedules.
                 ------------------------------

                 All schedules have been omitted since the required  information
is not present or not present in amounts sufficient to require submission of the
schedule,  or because the information  required is included in the  consolidated
financial statements and the notes thereto.

      (b)  Reports on Form 8-K.
           -------------------

                 (1) On January 13, 2004 , the Company filed a Current Report on
                   Form 8-K to report that:

                        On December 3, 2003,  Coastal Caribbean Oils & Minerals,
                  Ltd. ("Company") issued a press release announcing the Florida
                  First  District  Court of  Appeals'  decision  relating to the
                  Company's Motion for Clarification,  Rehearing,  Certification
                  and Request for a Written Opinion as to the Court's per curiam
                  decision issued on December 3, 2003. As a result of the denial
                  of the  Motion,  the  Court's  decision  affirming  the  trial
                  court's final judgment finding no taking of Coastals State


                                       67
<PAGE>

                  Drilling Lease 224-A, has become final. The Company  continues
                  to evaluate its options.

      (c)  Exhibits.

           The following exhibits are filed as part of this report:

Item Number
-----------

      2.   Plan of  acquisition,  reorganization,  arrangement,  liquidation  or
           succession Not applicable.

      3.   Articles of incorporation and By-Laws.

           (a) Memorandum of  Association  as amended on June 30, 1982,  May 14,
               1985 and April 7, 1988  filed as Exhibit 3. (a) to Report on Form
               10-K for the year ended December 31, 1998 (File Number 001-04668)
               is incorporated herein by reference.

           (b) Bye-laws are  incorporated  by reference to Schedule  14(a) Proxy
               Statement filed on May 13, 1997 (File Number 001-04668).

      4.   Instruments  defining  the  rights  of  security  holders,  including
           indentures.

           Not applicable.

      9.   Voting trust agreement.

           Not applicable.

      10.  Material contracts.

           (a) Drilling  Lease No. 224-A,  as modified,  between the Trustees of
               the Internal Improvement Fund of the State of Florida and Coastal
               Petroleum  Company dated February 27, 1947 filed as Exhibit 10(a)
               to Report on Form 10-K for the year ended December 31, 1998 (File
               Number 001-04668) is incorporated herein by reference.

           (b) Drilling  Lease No. 224-B,  as modified,  between the Trustees of
               the Internal Improvement Fund of the State of Florida and Coastal
               Petroleum  Company dated February 27, 1947 filed as Exhibit 10(b)
               to Report on Form 10-K for the year ended December 31, 1998 (File
               Number 001-04668) is incorporated herein be reference.

           (c) Drilling Lease No. 248, as modified,  between the Trustees of the
               Internal  Improvement  Fund of the State of Florida  and  Coastal
               Petroleum  Company dated February 27, 1947 filed as Exhibit 10(c)
               to Report on Form 10-K for the year ended December 31, 1998 (File
               Number 001-04668) is incorporated herein by reference.


                                       68
<PAGE>

           (d) Memorandum  of Settlement  dated January 6, 1976 between  Coastal
               Petroleum Company and the State of Florida filed as Exhibit 10(d)
               to Report on Form 10-K for the year ended December 31, 1998 (File
               Number 001-04668) is incorporated herein by reference.

           (e) Agreement   between  the  Company  and  Coastal  Petroleum  dated
               December  3, 1991 filed as  Exhibit  10(e) to Report on Form 10-K
               for the year ended  December 31, 1998 (File Number  001-04668) is
               incorporated herein by reference

           (f) Agreement  between Lykes Minerals Corp. and Coastal Caribbean and
               Coastal  Petroleum  dated October 16, 1992 filed as Exhibit 10(f)
               to Report on Form 10-K for the year ended December 31, 1998 (File
               Number 001-04668) is incorporated herein by reference.

           (g) Stock  Option Plan  adopted  March 7, 1995 filed as Exhibit 4A to
               form  S-8  dated  July  28,  1995  (File  Number   001-04668)  is
               incorporated herein by reference.

      11.  Statement re: computation of per share earnings.
           ------------------------------------------------

           None.

      12.  Statement re: computation of ratios.
           -----------------------------------

           Not applicable.

      13.  Annual report to security  holders,  Form 10-Q or quarterly report to
           ---------------------------------------------------------------------
           security holders.
           -----------------

           Not applicable.

      16.  Letter re: change in certifying accountant.
           ------------------------------------------

           Not applicable.

      18.  Letter re: change in accounting principles.
           -------------------------------------------

           Not applicable.

      21.  Subsidiaries of the registrant.
           -------------------------------

           The Company has one subsidiary,  Coastal Petroleum Company, a Florida
               corporation which is 58.45 % owned.

      22.  Published  report  regarding  matters  submitted  to vote of security
           ---------------------------------------------------------------------
           holders.
           -------

           Not applicable.

      23.  Consent of experts and  counsel.
           --------------------------------


                                       69
<PAGE>

      23.1 Consent of Ernst & Young LLP.

      23.2 Consent of James, Moore & Co., P.L.

      24.  Power of attorney.
           ------------------

           Not applicable.

      31.1 Certification   of  Chief   Executive   Officer   Required   by  Rule
           13a-14(a)-15d-14(a) under the Exchange Act

      31.2 Certification of Chief  Accounting and Financial  Officer Required by
           Rule 13a-14(a)-15d-14(a) under the Exchange Act

      32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
           to Section 906 of the  Sarbanes-Oxley Act of 2002 executed by Phillip
           W. Ware

      32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
           to Section 906 of the  Sarbanes-Oxley Act of 2002 executed by Kenneth
           M. Cornell

      99.  Additional exhibits.
           -------------------

           99.1  The decision  Coastal  Petroleum  Company v.  Florida  Wildlife
                 Federation  et. al. of the First District Court of Appeal dated
                 October 6, 1999 (St. George Island permit application case), is
                 incorporated  by  reference to Exhibit  99(a) to the  Company's
                 Current  Report on Form 8-K  filed on  October  7,  1999  (File
                 Number 001-04668).

           99.2  Complaint,  filed  January 16, 2001 in the Leon County  Circuit
                 Court,  Coastal  Petroleum  Company,  Plaintiff  vs.  State  of
                 Florida,  Department of Environmental Protection,  and Board of
                 Trustees  of the  Internal  Improvement  Fund,  Defendants,  is
                 incorporated  by  reference to Exhibit  99(a) to the  Company's
                 Current  Report on Form 8-K filed on  January  18,  2001  (File
                 Number 001-04668).

           99.3  The final judgment in the Leon County  Circuit  Court,  Coastal
                 Petroleum Company,  Plaintiff vs. State of Florida,  Department
                 of  Environmental  Protection,  and  Board of  Trustees  of the
                 Internal Improvement Fund, Defendants,  dated November 15, 2002
                 is  incorporated  by reference to Exhibit 99.1 to the Company's
                 Current  Report on Form 8-K filed on  November  18,  2002 (File
                 Number 001-04668).

           99.4  The Appellant Decision of the First  District  Court of Appeal,
                 Coastal  Petroleum  Company,  Appellant  vs.  State of Florida,
                 Department of Environmental  Protection,  and Board of Trustees
                 of the Internal Improvement Fund, Appellees,  dated December 3,
                 2003.

           99.5  Financial Statement Schedules.
                 -----------------------------

                 None.



                                       70
<PAGE>


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                         COASTAL CARIBBEAN OILS & MINERALS, LTD.
                                                       (Registrant)

                                         By /s/ Phillip W. Ware
                                            -------------------
                                               Phillip W. Ware, President and
                                               Chief Executive Officer


Dated:   April 08, 2004
         --------------

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the date indicated.


By /s/ Phillip W. Ware                         By /s/ Kenneth M. Cornell
   -------------------------------------          ------------------------------
      Phillip W. Ware                                Kenneth M. Cornell
      President, Treasurer, Director and             Chief Financial Officer and
      Chief Executive Officer                        Chief Accounting  Officer

Dated:     April 08, 2004                      Dated:     April 08, 2004
       ---------------------------------          ------------------------------


By /s/ Graham B. Collis
   -------------------------------------
      Graham B. Collis
      Director

Dated:     April 08, 2004
       ---------------------------------

By /s/ John D. Monroe
   -------------------------------------
      John D. Monroe
      Director

Dated:     April 08, 2004
       ---------------------------------

By /s/ Robert J. Angerer
   -------------------------------------
      Robert J. Angerer
      Director

Dated:     April 08, 2004
       ---------------------------------




                                       71
<PAGE>


                                INDEX TO EXHIBITS
                                -----------------


Exhibit No.
-----------


23.1      Consent of Ernst & Young LLP

23.2      Consent of James Moore & Co., P.L.

31.1      Certification pursuant to Rule 13a-14 by Phillip W. Ware

31.2      Certification pursuant to Rule 13a-14 by Kenneth M. Cornell

32.1      Certification pursuant to Section 906 by Phillip W. Ware

32.2      Certification pursuant to Section 906 by Kenneth M. Cornell

99.4      Opinion of the  District  Court of Appeal,  First  District,  State of
          Florida, dated December 3, 2003.